WILLS, ESTATES, AND TRUSTS OUTLINE

Alternative Approaches to Disposing Property

• During life

• Gift: avoids probate

• Joint tenancy: avoids probate

• Spend it!

• After death

• Will: Doesn’t necessarily avoid probate

• Trust

• Pay on death K

• Stocks, life insurance, bank account

Pass Property through a will

• Testate Estate: D died and left a will

• To Die Testate: D devises real property to devisees AND

bequeaths personal property to legatees

Devise: 1-201(10): Testamentary disposition of real and

personal property

• Intestate Estate: D dies and left no will

• Estate passes through the intestacy statutes on descent and distribution

Who can you disinherit?

• Can’t totally disinherit a spouse. Spouse always gets some of the estate

• Can totally disinherit kids

Why write a will?

• To make sure that people who are entitled to property get it

• D gets to appoint the personal rep/executor of the estate

• Guardianship: Who do you want to take care of your minor kids why you die?

Advantages of writing a will

• Orderly method of disposition

• D decides who the personal rep will be

• If D dies intestate, there’s a list (preference list) as to who the rep will be

• Requirement and expense of a fiduciary bond can be eliminated

New Michigan Probate Code: EPIC

• Estates and Protected Individuals Code

• Decedents estates

• Living individuals

• Legally incapacitated individuals and minors

Hodel v. Irving: Right to pass property at time of death is a constitutionally protected right

3 prong test to “taking” cases

• Economic impact of the regulation

• Is there an interference with investment-backed expectations?

• Crc of govt. action

• Interference with one’s bundle of rights

Shapira v. Union National Bank: What a Testator wants done with his estate is not a decision for the judge. Duty of Court is to honor testator’s intention within the limitations of the law and public policy.

• Parent has the right to place conditions on their children before children can get a piece of the estate. ***There is no constitutionally protected right to receive property from a parent’s estate***

• Interrorum Clause: A gift conditioned upon the act of another controlled by the Testator.

• If condition is filled and is broken after kid gets the $, then he still keeps the $

• Controlling hand from the grave!

• Reasonableness looked at at time of testator’s death

• Generally, Cts disfavor these clauses

IE: If my son divorces and marries a 2^nd time, then no money. Upheld

IE: There’s no fundamental right to stay single. Public policy favors marriage

IE: Kid gets money only if he doesn’t marry X. Not upheld. Cannot restrict based on a particular person

IE: Restrictions on personal habits. Upheld bcz of public policy

IE: Kid gets money only if he graduates from law school. Upheld if the child is capable of graduating from law school. ***Cts look at the reasonableness of the condition***

IE: Kid gets $ only if he never speaks to Uncle Joe. Not upheld. Can’t have a restriction that interferes with a family relationship and can’t encourage divorce.

• Gift Over Clause: Money will be given away if condition is not met.

Transfer of Decedent’s Estate

• Probate Property

• Probate Cts handle these

• To “go through” probate means to have an estate administered in one of these Cts

• Ct can be used for dispute resolution and the orderly distribution of property

• Passes under decedent’s will or through intestacy statutes

• WILL: 1-201(3)

• Testamentary instrument

• Appoints executor

• Revokes or revises a previous will

• Nominates guardian

• Limits right of individuals or class to succeed to property of D by intestate succession

• TRUST:

• Created by D

• While alive

• May by revocable or irrevocable

• Rev: Valid in all states

• Assets go to beneficiary directly from D

● Non Probate Property

• Passes under an instrument other than a will which became effective before D’s death

• Joint Tenancy: D’s interest vanishes at death and survivor gets all

• Life Insurance: Paid to bene when D dies

• Ks payable on Death: Pension plans, tax deferred investment plans

• Interests in Trusts: Trustee holds property for benefit of named bene in accordance with terms of trust

Administration of Probate Estate

The first step is to appoint a personal rep (1-201)(36)) to handle D’s affairs

• Inventory and collect D’s assets

• Manage assets during administration

• Receive and pay claims of creditors and tax collectors

• Distribute assets to those entitled

Important Definitions

Probate: System of carrying out the disposition of property after death

• Must follow certain procedures

• It’s not wrong to avoid probate if you do it reasonable

Streamline: Can do it in about 5 months, average is 1 year. IRS will Q it if more than 2 yrs

Cost has been curtailed: Legal fees: Hourly rate with a detailed justification of time

• Can take into account factors like difficult family members and litigation

• MICH: Atty fees must be approved by a Probate judge

Fiduciary: 1-201(16): Personal rep, guardian, conservator, trustee

• Owes a greater duty of care/higher std of care

• Activities will be scrutinized by the Ct

• MICH: Includes temporary rep, successor, etc

Devise: Gift of real or personal property given to devisee

Bequest: Given to legatee during D’s life

Beneficiary: 1-201(3): Benefits under will, trust, ins. Policy, etc

• Has present OR future interest in another’s assets

• Whether by will or intestacy

Distributee: 2-201(13): One who received property of D other than a creditor or purchaser

Executor: D dies and leaves a will naming the personal rep. Executor is a male personal rep

Executrix: Female personal rep

Administrator: Personal rep is not named in the will. This is the male admin.

Administrator CTA: “Cum Testamento Annexo”: “with will annexed”

• This is an administrator who’s not the original (or first) appointed personal rep

Administrator DBN: Administrator gets appointed to finish off what the original admin started

IE: where executor or orig admin started probate, but can’t finish it for some reason

Administratrix: Female administrator

Interested Person: 1-201(24): Includes heirs, devisees, children, spouse, creditors, benes, and any other person having a property right in or claim against a trust estate or D’s estate, a ward’s estate, or protected person. Child of D not named in will is also an interested person, but if a child is cut out, then he’s not an interested person! (too bad)

TEST: Who’s an interested person depends on which petition is getting filed.

IE: When filing a petition for confirmation of sale of D’s real estate, a creditor is an interested person. Usually, we look at unpaid creditors: they must receive notice of sale.

Heir: 1-201(2): Closest people to D. Spouse, child, parents, and so on.

1-201(2): The intestacy statute that defines persons entitled to succession of D’s property

Next of Kin: Everyone is D’s next of kin

NOTE: All heirs are next of kin and not all next of kin are heirs. An ex-spouse is neither

Consanguinity: Relationship by blood affinity

• The only heir that does not have consanguinity is a spouse

• Adopted relative is treated as blood relative

Issue: One’s children, grand children, great grand children, etc. (descendents) They descend from D

The Probate Process (not on exam but will need this for writing assignment)

• STEP 1: We have assets and a D

1. Start with jurisdiction: There are 2 types of location for estates

1. Domiciliary estate: Estate opened where D is domiciled

IE: I live in Wayne County, so my estate will go through Wayne County Probate Ct

1. Ancillary estate: Estate opened where D is not domiciled but owns property

You must open a domiciliary estate and then send notice to the ancillary jurisdiction

1. What kind of estate will you open?

1. Formal: Conducted before a judge w notice to all interested persons

2. Informal: Conducted w/o notice to interested persons. Prof doesn’t like this one

3. Formal/Supervised: Do this if you’re dealing with a dysfunctional family

4. Formal/Unsupervised: Recommended in majority of states

Not on exam, these are just dfrn types of estates that you can open

NOTE: In general, do it as unsupervised as possible

1. What kind of documents do you need when you go to Probate Ct to open up the estate?

1. The original will and whether there’s a will or not, take a copy as well

2. Fill out your “Petition for Formal Administration”

1. On petition, you choose formal or informal

2. Give name of personal rep on the petition

3. There’s a chart on the petition where you need:

1. Name of heir

2. Relationship to D

3. Age (if 18 or over, put “full”)

4. Who are you requesting to be appointed administrator of the estate?

3. Need “Testimony of Interested Persons” form

1. Need same info as first petition

2. Q/answer format

3. Goes through definitions as to who heirs are

4. Petitioner’s sig must be notarized

5. Testimony (form) gives info under oath w/o having to stand in front of a judge

1. If you have a will that leaves assets to someone other than D’s immediate family member, then you’ll need a “Supplemental Testimony” form

IE: If there’s a gift to charity or $’s going into a Trust

1. Take an “Acceptance of Appointment” form AND an “Order” appointing a personal rep

1. Signed statement by personal rep that s/he will adhere to the jurisdiction of the Ct

1. May or may not need a Bond: Depends on 3 factors

1. What kinds of assets are going into Probate?

2. What kind of estate is being opened?

3. What’s in the will?

1. If it’s just a house, then no need for a bond

2. If it’s assets that can be liquidated, then you’ll need a bond bcz with liquidated assets, someone can liquidate them and run off to Mexico with the $!

BOND: Says “if personal rep steals the money and runs, the surety will replace the $” (like an insurance company) NOTE that most companies will not give a bond to someone who is not represented by an atty

1. Now that you have all of the above, pay the $100 filing fee at the window

1. You’ll need a check for 100 and one for 10 bucks for each additional letter of authority (get a few extras)

1. Now you go see the Analyst

1. Analyst is like a referee who will review the paperwork and the personal rep will be appointed without seeing the judge

2. NOTE: You might need a Waiver or Consent by the interested persons

3. Sometimes, there might even be a hearing and you must serve notice to all IPs

1. By mail: at least 14 days before the hearing

2. By person: at least 7 days before the hearing

Step 2: Bring a Notice of Publication

• You must publish for creditors. Creditors get 4 months to make a claim against the Estate

• Wayne County: You don’t need one, Ct clerk will do it for you’

• Creditors: Include banks where D had credit cards, hospital if there’s a bill, mtg bank, GMAC, etc (Anyone that D owes a debt to at the time of death)

• Statute of Limitations: There’s no definite start date for S/L

• It’s not self actuating

• It’s within control of family

• As such, actual notice must be given to Creditors

• MICH: Go through D’s records for 2 years before the date of death to see of D owes $ to anyone. Must go where there’s an outstanding, unpaid bill!

• How do you know if one is a “reasonably known” creditor?

• As long as you can show that it was not unreasonable for you not to know of the Creditor is the TEST

Step 3: Start Gathering and Preparing the Assets and Inventory

What do you put on the Inventory “Form” and what Value do you put on the property?

Inventory: Will be sent out to all interested persons with a cover letter

Same inventory forms is used for Conservatorship and Decedent’s Estate

Value: Is on the D’s date of death for D’s estate, even if there’s no will and D has been dead for 15 years

Value: Is on the date you were appointed conservator for a Conservatorship

NOTE: List only assets that are D’s name alone and don’t list jointly held property!!!

1. Bank accounts

1. Get copy of statements from Bank as of date of death (DOD)

1. Need name of bank, acct #, type of account (in the assets column) and amount of acct in the Value column

1. What about checks that cleared after the DOD or deposits that posted after the DOD?

1. These will be taken care of when you do an accounting and will count as income

2. Soc Sec checks that come in after DOD must be sent back!

1. Stocks

1. Need stock name, # of shares, and type of shares (ie: common stock)

1. You can call Detroit Public Library for some of this info

2. Use high selling price and low selling price average on the DOD

1. If DOD is on the weekend or holiday, then average the high and low of stocks on the day before death, day after death, and then average these two figures

2. You can get these #s from the newspaper

3. If there’s a negative balance, then it does not go on the Inventory

1. Savings Bonds

1. Listed as face value

2. You can go to any bank and get the calculated value of bonds issued by month and year

1. Real Estate

1. Need full, legal description

2. Need street address

3. There are 3 methods for Value

1. Double State Equalized Value SEV

1. You’ll need the tax bill for SEV: take copy with you

2. This is an approximation of what the selling price of the house is or what it would go for on an open market

1. Therefore, on Inventory side, put “Double SEV of $25,500 and put $51,000 on the Value side

1. NOTE: If there is a balance owed on the mtg, you must deduct the amount owed from the SEV. This must be a secured lien, not an unsecured lien

1. Appraisal

1. Formal real estate appraisal for value on DOD

2. Can be used for any real estate, like a home, land, etc.

3. You appraisal IF

1. You must file form 706 for IRS

2. On Inventory side, put “Appraisal at …” see attached

1. Always attached copy of appraisal

1. Actual Selling Price w/in One Year of DOD, less the mtg owed

1. Use if real estate is going to be put up for sale and not given away or

2. If you sell the real estate w/in 1 year of DOD

1. Be sure to attach the Closing Statement

1. Vehicles

1. IE: 1998 Buick, VIN #

1. Need copy of title for verification of VIN #

2. For Value, use “Red Book”: see VIN # for model #

1. You’ll get the retail value

2. Use publication that covers your DOD

3. House, trailer, boats, etc. Each kind has its own Red Book

1. Personal Property

1. Household and personal effects

1. For an average estate, use $1000 for all, including furniture and kitchen appliances

2. If there’s expensive jewelry, get it appraised before distribution to family mbrs

3. NOTE: You don’t need a Ct order to distribute these

4. NOTE: After discovered personal or real property, you’ll need to re-open the estate if you need a Ct order to distribute the after discovered property or get D’s name cleared off of real estate

NOTE: If there’s a shoebox full of $25,000: If wife finds it, she keeps it regardless of amount bcz if married, there’s a presumption that it’s jointly owned. However, if it’s a bro or sis that finds it, then the TEST is the further distant the relative and the larger the amount, then the Q is reasonableness

Step 4: When the Inventory is in Final Form

1. Get the orig signed by the personal rep

2. Take it with you to Ct so you can pay the inventory fee and take orig back with you, give

Ct a copy. Put a copy in the file to prove that you included everything individually

owned by D

1. Pay claims

2. Distribute assets

3. If there is income coming into the Estate, apply for a federal tax id # for the Estate and

prepare a 1041: A fiduciary income tax return

1. Prepare a Final Account

1. Send this to all IPs to show them that they got what they were entitled to

2. Final Acct: NEED Inv. #

+ Receipt #

Gross Estate

• Distribution

= Net

1. Get a Receipt from all IPs saying that they received their share

1. File a “Closing Statement” and Ct will issue a “Certificate of Completion”

Attorney Fees: MCR 8.303

• Need written atty fee agreement with client

• Includes hourly rate

• How often you will bill the Estate

• You’ll send a copy of this to all IPs with the first notice you send them

• If they have a problem with it, they can file a petition with the Ct and the Judge will decide on it

• You must send a copy of all bills to all IPs

• If it’s a Supervised Estate, your atty fee must be approved by the Ct.

Probate from Small Estates

• This only takes hours!

• IE: For Stock with a value of $2500, use form “Small Estate Under $15,000”

• You’ll need

• Assets

• Heirs

• Copy of paid funeral bill w/who paid the funeral expenses. This person gets reimbursed first

Universal Succession: NOT in MICH

• Heirs or residuary devisees succeed to the title of all D’s property and no personal rep is appointed by Ct

• Natural heirs/family mbrs step into shoes of D. They take title to his property and are responsible for his debts

• Need written agreement amongst all heirs

• If D has 3 heirs, they’ll hold the property as Tenants in Common

• U.S. in the UPC: 3-312 through 3-322

• Universal successors have full power of ownership to deal with estate’s assets

• They assume creditor and tax liability: they are personally liable

MICH: EPIC 700.3914: Family Agreement Statute

• If all heirs agree in writing to a distribution dfrn from the intestacy statute or the will, the Ct. can approve the agreement

• Personal rep must follow the agrmt

• Minors or legally incapacitated ppl: Ct will approve it as long as the agrmt is fair to these ppl. Ct will appoint a guardian to sign the agrmt on minor’s behalf

Limitations of Distribution

• Rule Against Perpetuities

• Taxes

• Estate taxes start at 39% and go up to 55%!

You have more of a bundle of rights w/regard to your property when you are alive.

Ct. can interfere with what D wants done with his property after death

IE: What if I want my personal rep to burn my money and sprinkle it over my grave?

Most judges will uphold this

IE: What if I want to be buried in my farari?

Upheld

IE: Burn my original Picasso?

Not upheld

TEST: Cts look at the interest of the preservation of the item that D wants destroyed after death (particularly a societal interest with regard to the Picasso)

IE: Destroy my pet!

1. Are pets property?

2. Do we recognize them as living beings?

NOTE: Animal rights groups have no standing to object to an order such as this in the will unless they have possession of the animal.

Professional Responsibility

(professional responsibility outline)

Simpson v. Calivas: An atty who drafts a will owes a duty of reasonable care to intended benes. This duty arises out of relationship btn the parties and protection against reasonably foreseeable harm. TEST: Focus on forseeability of injury to the intended bene

NOTE: Duty of a general practitioner is to refer client to a specialist if he can’t handle the matter with reasonable skill and care. If he fails to do so, then he’ll be held to std of care of a specialist in that area.

NOTE: For a negligence action against atty, see

DUTY: Is there a duty owed to will contesters where D wanted an amendment to the will, but D died and couldn’t sign the amended will in time?

NO. There’s no status as a 3^rd party bene here. Can’t bring in parol evid of D’s conversation with atty who drafted the will.

If no duty, stop here. If yes duty, go to Breach, Causation, and Damages

NOTE: Could use a properly signed letter authorizing an amendment to D’s will

WILLS: Interpreted by 4 corners approach. Parol evid is inadmissible whereas in a negligence action against atty, parol evid is admissible

Hotz v. Minyard: A/C relationship is a Fiduciary relationship. Since the bene to a will was also the atty’s client for other matters, atty owed her a fiduciary duty to act in good faith, where D told atty not to tell bene about the amended will. Atty was suppose to advise client that ethics will not allow him to breach his fiduciary duty to his client and he should have withdrew from representation bcz of a conflict of interest

Ch. 2: Die Intestate UPC 2-102

Examples:

Spouse (surviving spouse)

No issue

No parents

Spouse gets 100% under UPC and EPIC

Spouse

Kids from this mrg

Spouse had no other issue as well

UPC: Spouse gets 100%

EPIC: Spouse gets first $150,000 and ½ of remainder

Issue: Share the other ½ equally

Spouse

D and spouse’s kids (D’s issue)

Spouse’s issue (D’s step kids)

UPC and EPIC: Spouse gets first $150,000 and ½ the remainder

Issue split the other ½ equally

D’s step kids get nothing!

**Theory behind step kids getting nothing is that their biological parent will leave them something when she dies

Spouse

Issue from this mrg (D’s issue)

D’s other issue from a previous mrg or out of wedlock

UPC: Spouse gets first $100,000 and ½ the rest

Issue from this mrg (D’s issue) get ???????????

EPIC: Spouse gets first $150,000 and ½ the rest

Issue from this mrg (D’s issue) split the other ½ equally

Spouse

Issue from D’s first mrg

No issue from this mrg

EPIC: Spouse gets first $100,000 and ½ rest the rest

Spouse

No issue

Surviving parents

UPC: Spouse gets first $200,000 and ¾ the rest

Parents split the other ¼ equally

EPIC: Spouse gets first $150,000 and ¾ the rest

Parents split the other ¼ equally

NOTE: If there’s only $80,000 in the estate, then it all goes to the spouse

The law looks to D’s strongest relationships

**Whenever there are issue, the parents get nothing!!!!!!**

UPC 2-103 and EPIC 2103

Examples

No spouse

No parents

Have issue

Issue take all

No spouse

No issue

Have surviving parents

Parents take all

No spouse

No issue

No parents

Surviving siblings split all equally

Note: If one of the siblings is dead, then the dead sibling’s kids will split his share equally

Only maternal and paternal grandparents are living

½ goes to maternal grandparents to split equally

½ goes to paternal grandparents to split equally

then aunts and uncles

then cousins

If there are no aunts, uncles, cousins on maternal side, then that share will go to the paternal side and vice versa. If none there, then the estate escheats to the state

UPC 2-107 and EPIC 2107: Half Blood Siblings

Relatives of the half blood take the same as relatives of the whole blood. Therefore, when you get a problem with ½ siblings, look for a common parent

4 Prong Test for Common Law Marriage:

1. Clear and convincing evidence of a present agrmt to live as H and W

2. Both must be free to marry. One can’t be living in bigamy

3. Must be openly cohabitating to the public

4. Must have begun the arrangement before 1957

1. There’s no set time on how long the couple has lived together. There’s a reasonable std here

2. Most states still recognize CL mrgs

3. If CL mrg is established under the laws of another state and then the couple moves to Mich, Mich will recognize the CL mrg

For surviving spouse under UPC 2-802 and EPIC 2801: you need a valid mrg cert

When is spouse that’s named on the mrg cert NOT a surviving spouse?

1. Divorce

2. Annulment

3. Decree of separation that doesn’t terminate the status of H and W

4. Living in a bigamous relationship with another (eff. 04/2000). Cheat gets 0! Even if property is jointly owned by H and W

5. Individual who has done one or more of the following is NOT a surviving spouse:

1. Willful absence from spouse

2. Deserted spouse for one year or more

3. Willfully neglected or refused to provide support if required to do so by law

UPC 2-804 and EPIC 2806, 2807, and 2-808

Divorce revokes any right to receive a piece of the estate

• If divorced, you are now revoked out of receiving anything that you were entitled to had you still been married

• Divorcee can’t be pers rep, executor, trustee, can’t get bene $ from life ins

• Divorce sethers jointly owned property. Property held by H and W: H and W become Tenants in Common

If H has 2 alleged surviving spouses, the presumption is in favor of W #2

Uniform Simultaneous Death Act: (USDA) Repealed in MICH

• If there’s no credible evidence that one spouse died before the other, then their deaths are deemed to be simultaneous.

• If a person dies simultaneously with his heirs or devisees, then the bene is deemed to have predeceased the benefactor

MICH LAW: 120-hour rule

UPC 2-702 and EPIC 2702 for Testate Estates

UPC 2-104 and EPIC 2104 for Intestate Estates

• You must survive your spouse, heir, or devisee by 120 hours in order to be considered the survivor

Janus v. Tarasewicz: Std of survivorship is “by a preponderance” Burden of sufficiency of evid (b. of production) may be met by evid of a positive sign of life in one body and absence in the other

TEST 1: positive sign of life

TEST 2: Brain death test

Irreversible cessation of the circulatory function: if these stop, you’re dead

There are 3 systems of Distribution

1. Per Stripes: Start at the root level (first one after T)

2. Per Capita: If all descendants at first level are dead, then move to next level where ppl are alive. This system equalizes the division to an equal distribution scheme

3. Waggoner System: MICH: At every level of distribution, the issue split equally what’s left over

SEE DIAGRAMS IN NOTES FOR EXAMPLES OF THESE

Table Of Consanguinity

• Each line is called a “Parentela”

• Parentelic System: Intestate estate passes to grandparents and their descendents. If none, then it passes to great grandparents and their descendents.

• Degree of Relationship System

• NOT in MICH and only in Louisiana

• Intestate estate passes to the closest of kin, counting degrees of kinship

• See Table of Consanguinity

• UPC 2-103 and MICH: does NOT permit inheritance by intestate succession beyond grandparents and their descendents. If there are no survivors at all, then estate will escheat to the State

Posthumous Children UPC 2-108 and EPIC 2108

• These are children that are born after the death of their father

• Only men have posthumous children

• Treated as living at the time of their father’s death as long as kid is living for 120 days after the father dies

• So, if mom is pregnant at the time dad dies, child is utero is presumed to be that man’s child so long as the child lives for 120 days after the dad dies

• C/L: Child born to a woman w/in 280 days of the death of her H, the kid is presumed to be that man’s child

• MICH: There is no dead line for when the child has to be born (after the dad dies) It’s okay as long as the child is born w/in a reasonable time after dad’s death

How do we treat kids that are born after their fathers’ death?

IE: Children born by reproductive technology

IE: Invetro kids: See Davis v. Davis

Some states won’t allow these kids to inherit

IE: Surrogate parenthood

IE: Same sex parents: Held in Mass that kid can inherit through both mothers as the child of each

These legal issues with posthumous kids come up very often in Estate Planning!

Half Blood Relatives: Treat them as whole blood relatives UPC 2-107

Adopted Children

Hall v. Vallandingham: Whether children who are adopted lose the right to inherit from a natural relative since they would have inherited had they not been adopted (after the death of biological parent)

UPC 2-114(b) and EPIC 2114: Step parent adoption does not terminate the rights of the adopted kid to receive through a deceased parent’s family

NOTE: UPC 2-113: One who is related to D through two lines is entitled to only one share

UPC 2-114: Parent and Child relationships

• Children born out of wedlock are still children of the parent for inheritance purposes

• Adopted kid is still child of the adopting parents for inheritance purposes

• NOTE: rights of adopted kids vary from state to state

• NOTE: Vol or invol termination of parental rights terminates that child’s right to inherit from the parent whose rights were terminated

Adult Adoption: only persons who have standing to challenge a will are those persons who would take if the will were denied probate. If T adopts a child, T’s collateral relatives can’t contest the will since now, they can inherit nothing by intestacy.

O’Neal v. Wilkes:

• Equitable Adoption

• You need substantial compliance with the adoption K

• An equitable adoption will estop the rest of the surviving family mbrs from contesting to the adopted child’s right to inherit from parent’s estate

• MICH recognizes equitable adoption as a CL principle, it’s not statutory

• EA protects the adopted child and no one else! It works one way since the child is the innocent party in finalizing the adoption. Parent, bro and sis, etc can’t inherit from a child’s estate where the child was equitably adopted, only the child’s kids can inherit.

Children Born out of Wedlock: To what extent can we establish paternity?

Uniform Parentage Act: Can establish paternity by:

• While kid is minor, he’s raised by the man as if the kid were his child OR

• Father acknowledges paternity in writing with the appropriate Ct OR

• The man marries the child’s mother

• Problem with UPA: It’s very vague. Under 3, any man who marries the child’s mother is that kid’s father!

UPC and EPIC (a)(1): 4 ways to establish paternity

• Father signs a written acknowledgement that’s recorded in the Probate Ct where the child resides

• Man and woman jointly request the issuance of a substituted birth cert, in writing, putting the man’s name on the birth cert

• Man and child mutually acknowledge the parent/child relationship before child turns 18 AND it continues until one of them dies

• HOW do you prove this?

• Testimony

• Affidavits that father and son held themselves out as such to the community

• Holiday and birthday cards (to son, from father, etc)

Sharonbock Case: MICH (unpublished): Held that a 34-day-old child cannot acknowledge father

• Man is determined to be the child’s father and of order of “Filiation” is entered. Usually, man is hauled into Ct here

EPIC 211(a): Child born OR conceived during a mrg is presumed to be the child of both parent’s (and the husband’s child even if mom cheated)

• This is true even if mom gets pregnant while single and then marries the man

• Only legal father and mother can request testing to determine if the man is the child’s biological father

• Only the legal parents can challenge paternity and the child CANNOT

• ***Zubair requested testing that J’s kids were really his***

• In the eyes of the law, mrg means that the married man is the child’s father!

• EPIC 2114(4): Inheritance through a child is precluded unless the natural parent has actually been a parent to that child

• IE: Kid abandoned

10 years later, kid hit by car and wrongful death suit filed

Now PFT parent wants money

Held, too bad parent! In the eyes of the law, the natural parent is no

longer that child’s legal parent due to abandonment

Hecht v. Superior Ct: A decedent has a property interest in the sperm that he deposited at a sperm bank before his death. As such, he had the right to dispose of this property in his will in any matter that he pleased

Advancements

At CL, there existed a presumption that parents wanted to treat all kids equally w/re disposing their assets at time of death. If parent gave a lifetime gift, then this was considered an advance pmt of that child’s share of his parent’s estate

TODAY: We reversed the CL rule

If parent gave a lifetime gift to child, we don’t make up the difference UNLESS the parent indicated that this WAS in fact an advancement and not merely a gift

UPC 2-109 and EPIC 2109: If parent wishes for the gift to be an advancement, there must be a signed writing acknowledging such by the parent OR the child

Advancement only if:

• Grantor OR Grantee acknowledges the property as a gift in writing OR

• Grantor OR Grantee’s writing indicates that the gift is to be taken into acct in computing the division and distribution of the Estate

IE: Parent has 3 kids: A, B, and C. Parent gives A 10 grand during life. Parent then dies. At time of death, B and C each get 10 first and then the rest of the estate is split equally

Hotchpot

IE: D has no spouse, but has 3 kids: A, B, and C. During life, parent gave a 10 grand. Parent dies with 50 grand in Estate. To calculate the shares in the Estate, A’s gift of 10 is added to the 50 and the total of 60 is split equally.

• If instead, A had received property worth 34 grand, then she would NOT have to give it back at D’s death

• A gets property worth 34 grand during Parent’s life

• At death, there’s 50 grand in Parent’s estate

• B and C will split it equally and each get 25 grand

• Don’t look to A to reimburse B and C

• A got more, oh well!

• To avoid hotchpot, child has burden of proving that the $ or property was in fact a gift and is not to be counted against the child’s share of the Estate

• If Parent give A money and A’s kid money during life, then if at the time of Parent’s death, A, B, C, and A’s kid are alive, don’t count A’s kid’s share bcz the kid is not an heir since his parent is still alive. For hotchpot, only look to what was given to the actual heir

Expectancy

Children expect that their parents will leave inheritance to them equally

• There’s no gy that parents will leave estate to their kids

• There’s no gy that the parents will even have money to leave

You have a right to assign your future interest

Spend thrift trust prevents one from selling or assigning a future interest

Release of Expectancy

• Done btn parent and child

• Where child gives up his entire interest in parent’s estate

IE: Child says “Pay me 10 grand now and I’ll give up my right to any other $ I would have received at your death”

• Valid in USA

• Writing

• Signed by child

• Must be done for a fair consideration

• Consider fairness at the time and date the release is signed

• NOTE: If there’s only one child, the Probate Ct will undue the release

Transfer of Expectancy

• Selling your interest to a 3^rd party

• 3^rd party will pay child $ today for the expectancy of receiving child’s interest in child’s parent’s estate (or a piece of it)

• 3^rd party will greatly discount the value of it

• 3^rd party runs the risk bcz parents can lose their $ during life

Managing a Minor’s Property

Minor: EPIC 5102

Person w/ Disability 3918 (legally incapacitated individual)

What do you do in the minor is expected to cash in?

If the sum of $ is more than $5000, a Conservator must be apptd for the minor

Conservator

• Appted (can be a parent unless parent can’t manage the money)

• When appted, Conservator might be require to file a bond with the Ct in the amount of the money being held (in case Cons runs off with the $)

• Money must be in FDIC insured bank

• Bank must sign an agreement to replace the $ if someone withdraws w/o a Ct order

• Supervised by Ct

• Handles assets

• Preserves and invests funds for minor

• Prudent Investor Rule: allows Conservator to invest the minor’s $ as a reasonable and prudent person would invest his own

• Makes sure $ is not spent w/o Ct’s approval until kid is 18

• It’s not like the $ is locked away. If money is needed, Conservator or child over 14 can file a petition with the Ct

• $ can be spent on things like private school tuition

• What if kid is 16 and wants to buy a used car? (working p.t. and has after school sports)

• TEST: Is the request reasonable??

• Parents have a legal obligation to provide for their kids

• Just bcz kid has money doesn’t mean parent can start charging the kid for food, clothing and bill since the parent would have provided those had the kid not cashed in

Guardian

• Makes the decisions about the minor’s person

• Doesn’t handle assets

• Most likely to be a family mbr

• May be the same person as Conservator

Guardian Ad Litem (GAL)

• Appted when a petition is filed by a parent (or other person) to be a Conservator, or to withdraw $

• Special apptmt

• Acts as Judge’s advisor

• Stands in shoes of minor

• Reviews petitions that are filed to withdraw $ and advises judge as to whether the request is reasonable and make the decision

• If YES, GAL must, in writing, advise judge and recommend approval and grant of petition

Settlements for Minors

Before settlement is approved, you need:

• Need a conservator if settlement is more than 5 grand

• If net settlement is 5 grand even or less, no need for conservator, but you’ll need approval of the settlement

• If settlement is more than 5 grand, you’ll need

• Conservator from Probate Ct

• Approval of settlement from Probate Ct

• Need bond in same amt of settlement

• Need order/approval from Circuit Ct where law suit was filed

• If you reach a settlement w/o filing a suit, you still need approval from Probate Ct

IE: If settlement is 150 grand, enter into a Structured Settlement where child gets the money in installments. Better yet, buy an Annuity for child bcz the $ grows tax free

With annuity, no taxes, no Ct. orders, no conservator, no fees!

NOTE: Still need a petition for a structured settlement

Bars to Succession

In re Estate of Mahoney: Whether a widow convicted of manslaughter in connection with her husband’s death may inherit from his Estate

3 lines of authority

• Legal title passes to slayer and may be retained by him in spite of his crime

• Legal title will not pass to slayer bcz of the equitable principle that says that no one should be permitted to profit by account of his own wrong act, fraud, or crime. Treat killer as if he had predeceased the Decedent

• Legal title passes to slayer BUT equity holds him to be Constructive Trustee for D’s heirs or next of kin

• Compels slayer to convey the property to heirs

• Slayer will not be permitted to benefit from his crime

• To impose a Constructive Trust, a Ct needs Equitable Powers: must be a Ct of Equity

• Theory behind a Constructive Trust

• To prevent Unjust Enrichment

• It’s not created by a document

• Created by Cts of Equity

• Must be an intentional felonious killing

UPC 2-803 and EPIC 2803: Statutes of Felonious Killing

• Felonious and/or intentional killing: Killer will be deemed to have predeceased D

• Revokes killer’s right to receive under Estate, Pay on death K, life ins, jointly held interest, etc

• With joint tenancy, killer will keep her one half interest, but does NOT get his one half interest (too bad)

NOTE: If killer is acquitted in a criminal trial (O.J), the issue of guilt can be tried again in a civil proceeding. If guilt is proven by a preponderance of the evid, then killer can be barred from inheritance (under a lower std of proof)

In this civil proceeding, there’s no double jeopardy since liberty is not at stake

Note: UPC § 2-803 bars killer from succeeding to both probate and non-probate property and killer is deemed to have predeceased the victim

Note: UPC § 2-801 killer is deemed to have disclaimed the property

Q: Is a criminal conviction required to bar one from succession?

A: No. UPC § 2-803(g): Where D is acquitted, Ct must determine whether the accused would have been convicted under the preponderance of the evidence standard of proof. If so, D is barred from succession. Probate Ct is concerned with the killer benefiting.

Note: In USA, unworthy heirs, spouses who split or commit adultery are barred.

Disclaimers

• A disclaimer is a mechanism used by Donee to prevent title from passing to him

• Done a lot bcz of tax consequences

• In order for a disclaimer to be effective, you must follow the rules under IRC § 2518

• If D dies intestate, title to real and personal property passes to D’s heirs by intestacy statutes

• Intestate successor cannot prevent title from passing to him

• If D dies testate, devisee can refuse to accept the devise and title will not pass. Any gift, whether intervivos or by will requires acceptance by devisee

• Qualified Disclaimer

• Irrevocable and

• Unqualified refusal to accept an interest in property

• You cannot go back and change your mind. One you disclaim the property, that’s it!

• IRC § 2518: 4 Part Test

• Disclaimer must be in writing

• Disclaimer must be received by Donor or his Estate w/in 9 months of the date of death OR date of transfer OR date that Donee reaches age 21

• Donee must not receive any benefits of the gift

• Donee can’t control where the property then passes

Note: If you want to disclaim an interest in property, make sure you NEVER exercise any control over it, even for a few minutes bcz if you do, you will get taxed!

Note: Disclaimer must be signed without the Donee having received any benefit from the gift

• Exercising control: If Donee doesn’t accept it, he’s treated as if he has predeceased D

• Accepting Benefits of Gift: If it’s real estate and you move in even for a day, you have received a benefit

Partial Disclaimers

• Be very specific as to what you are refusing to accept in order for a partial disclaimer to be valid

• You cannot escape a tax debt obligation from the IRS but you can screw your other creditors

• Disclaimers can be used to manipulate shares

Troy v. Hart: Disclaimer was valid even though Donee did not understand what he was signing! As such, it’s still irrevocable!

Note: If a child comes to you and wants to do estate planning for his parents who are in a nursing home, advise client that he must spend the parents’ money on them and never mind his inheritance. Can’t hide money so parents can get Medicare.

Chapter 3: Wills: Capacity and Contest

Why require mental capacity?

• Will should be given effect only if it represents T’s true desires

• A mentally incompetent man or woman is not defined as a “person”

• Law requires mental capacity to protect T’s family

• Public acceptance of law rests upon a belief that legal institutions, including inheritance, are legitimate, and legitimacy cannot exist unless decisions are reasoned

• Assures a sane person that the disposition the person desires will be carried out even if the T becomes insane and makes another will

• Protects society at large from irrational acts

• Protects a senile or incompetent T from “exploitation” by cunning persons

Test of Mental Capacity

• T must have the ability to know:

• Nature and extent of T’s property

• The persons who are the natural objects of T’s bounty (T’s natural heirs)

• Disposition T is making at the time of death

• How these elements relate so as to forms an o orderly plan for the disposition of T’s property

• Therefore:

• In general and approximation, what does T own?

• Who are T’s heirs? How many kids does T have, etc?

• Specifically, who gets what? Does T want to disclaim anyone?

• Does T understand he is signing a will?

• Therefore, T must understand the significance of his acts

• This is a TOUGH TEST. It’s very hard to throw out a will based on lack of testamentary capacity

Note: Testamentary capacity cannot be destroyed by showing a few isolated facts UNLESS they directly bear upon and have influence T’s testamentary act

Note: Legal capacity to make a will requires greater mental capacity than is required to get married

Note: Person needs less capacity to sign a will than he does to sign a K, deed, or to give a gift during life

Note: The fact that a person needs a Guardian Ad Litem or Conservator doesn’t necessarily mean that a person can’t sign a will

Note: Marriage alone will give the surviving spouse a share of the senile person’s estate although he has no mental capacity to devise it to her

Ethical consideration: To draft a will for an incompetent person is a breach of professional ethics. An atty, however, may rely on her own judgment regarding a client’s capacity. She does not have to make a thorough investigation of it

• To be eligible to sign a will in MICH: EPIC 2501

• T must be of sound mind (have mental capacity)

• T must be 18 years old or older

Note: There’s no requirement that T be a US citizen bcz an alien may own assets in the US

Insane Delusion

Insane delusion may cause a particular provision or the entire will to fail due to lack of testamentary capacity.

Insane delusion cases involve some false belief about a mbr of T’s family

• Legal, not psychiatric concept

• A false concept of reality

• Majority view: TEST

• A delusion is insane

• even if there’s some factual basis for it

• if a rational person in T’s situation could not have drawn the conclusion reached by T

• In Re Honigman: T cut off his wife in his will bcz he thought she was having an affair and she contested it. Issue was whether a rational person in Mr. H’s situation would draw the conclusion that the wife was cheating.

Note: If only part of the will if affected by insane delusion, then you just throw out that part and not the entire will

Ante Mortem: Will contest before T dies

• Problem with Ante Mortem: If T is found to have mental capacity, then it’s highly likely that T will change his will the totally cut out the person that contested his will!

• Pro with Ante Mortem: Resolves issues bcz the best evidence is available

• There is NO Ante Mortem in MICH, it’s just in N.D., Ohio, and Arkansas (but Mich has the most law review articles on it!)

Undue Influence: Type of pressure or coercion that presses T do so something he would not otherwise have done

3 prong test

• Look for a confidential relation btn T and influencer.

• Does influencer have the opportunity to influence T?

• Atty/Client, Dr/Patient, Priest/Worshipper (Are any of these getting anything?)

• These are personal relationships

• Bene doesn’t even have to be involved in the transaction

• Someone has to contest the will or else no will contest

• There’s an automatic presumption of all 3 prongs and thus undue influence. In order to over come this presumption, bene must prove that T sought independent legal advice by clear and convincing evidence

 

 

NOTE: If someone leaves me $ and I’m an atty and I wasn’t involved in the transaction and I don’t even know of it, then I’ve got a problem bcz the presumption in my case is AUTOMATIC!!!

 

 

1. Bene and T living together

2. Someone who manages T’s affairs

3. Someone in a position to exclude

4. Moral or immoral activities alone is not enough, just bcz T left something to the bene

 

 

• Is T susceptible to influence?

• Look for a weak physical or mental condition of the T

• Old age

• Chronic illness

• Bed/House blind?

• Low IQ?

• Suspicious circumstances

• Threats to T

• Threats of prosecution

• Threats to leave an ill T alone to die

• Bene keeps will in her possession

• An induced dislike in the T’s mind about other family members by the bene

• Is there an unusual disposition in the will in favor of the influencer or someone close to the influencer?

• STD of Proof: By a preponderance of the evidence

• If 1-3 are proven, there’s a rebuttable presumption of undue influence and the burden of proof shifts and the other side has to prove that they did NOT influence T by a preponderance of the evidence

• NOTE WITH STD OF PROOF: If the bene is an atty, dr, or priest, then there’s a rebuttable presumption of undue influence and the atty, dr, or priest must prove that they did not influence T by clear and convincing evidence

• HARD TO PROVE!

 

 

Lipper v. Weslow: Son/atty drafted mother’s will and his cheap ass got mostly everything. Test for undue influence:

• Control: Confidential relationship: Influencer was T’s son and an atty. He lived next door and had a key to mother’s house

• Over T: T was susceptible to influence: She was 81, signed will w/o reading it, died 22 days after signing will

• Influenced T’s actions

• Actions taken would not have been what T would normally have done but for the contest: Unusual disposition in favor of son/atty: Yes, he got most of it. Statement as to why grandkids got nothing was in an atty’s words and not her own. You can tell she didn’t write it.

 

In Re Kaufmann’s Will: Homosexual couple where T gave everything to his lover who was dominating and managed all of T’s affairs. HELD, lover lost

 

 

In Re Seward’s Estate: Polish immigrant, age 27, married the heir to the Johnson and Johnson fortune, age 76. This case deals with an atty’s role in drafting a will and the ethical considerations that come with it

 

 

MICH: There are more factors:

 

• Activities of bene in procuring the will: influencing atty who drafts will

• Other suspicious happenings

• Mental instability/weakness

• Physical weakness

• Low degree of intelligence

 

 

Notes: It’s okay for an atty who’s a family mbr to draft a family mbr’s will, provided that the share going to the atty is a NORMAL share.

It’s better for a family mbr to ask you to draft a will than it is for you to ask them.

For any family mbr or close relative or friend, NEVER take a penny from them for drafting the will

 

 

EC 5-5: An atty shall not suggest that a gift be made to him/her. If the client insists, then the atty has a duty to advise client to seek independent legal advice

 

 

MRPC 1.8(c): Atty can’t draft an instrument where a substantial gift is given

This will not be the same for everyone. It depends on the client’s financial situation

 

Fraud

 

• A deception

• Imposed upon T

• As a result of deception, T performs in a way he otherwise would not have

 

 

TEST:

 

 

• Misrepresentation/fraud must be with intent to deceive T AND

• Misrep. must be for the purpose of influencing a testamentary disposition

• If only 1 exists, then you have a mistake or innocent misrep.

• Innocent Misrepresentation

• IE: T wants to leave her Estate to her son John. Best friend comes over and says “I think John is dead bcz he went to Coco Island and the news just said that there was an explosion there and everyone on the island is dead.” T now changes her will and gives all to best friend

• If friend knew of NO explosion and she lied, then this is fraud

• If friend honestly blvd that John was dead and did hear that all the ppl on Coco Island died, (but John happened to leave the Island an hour before the explosion), then this is innocent misrep.

• As a RESULT: Friend still gets T’s estate!!

• Cts will not correct innocent misreps

 

 

There are 2 types of Fraud

 

 

• Fraud in the Inducement

• Person misrepresents facts that cause T to either take an action or not take an action w/regard to his will

• Voidable

 

 

Father Divine Case: T left most of estate to Father Divine. She wanted to change it and give some of it to someone else, so Father Divine hired a Dr to kill her before she had a chance to do so. Held, fraud in the inducement bcz the act prevented T from revoking Will #1 and executing Will #2.

 

 

• Fraud in the Execution

• Person misrepresents crc or contents of the document being signed by T

• Will is Void and there’s no need to challenge it

• IE: If T signs a will when he thinks he’s signing a deed or a K

 

 

 

 




Chapter 4: Wills

 

Execution of Wills

 

Statute of Wills-1540-England

• Pass land

• By written will

• W/o having to leave land to 1^st born son

• No sig required

 

 

Statute of Frauds-1677

• 2 dfrn sets of rules for:

• Real property

• T could sign anywhere on the doc

• Need 3 Ws

• Ws don’t have to sign at the same time

• Personal property

 

 

Wills Act of 1877: Combined rules for passing real and personal property

 

• Writing

• Signed by T

• Sig at foot or end of doc

• 2 Ws

• Must sign doc at same time and in each others presence

 

EPIC 2502 and UPC § 2-502

EPIC follows Statute of Frauds of 1677

3 Requirements for execution of a will, except for a holographic will MICH

 

• Must be in writing

• We don’t recognize oral or non-cupative wills

• Must be signed by T or by someone else in T’s name in T’s presence and at T’s direction

• Must be signed by at least 2 persons, each of who witnessed the T’s signing OR T’s acknowledgment of the sig or will

• Here, 2 ppl watch T sign OR watch someone else sign T’s name in front of T and at T’s direction

• Today, T could sign will in presence of one W and then a few days later, have another W sign

 

 

These are minimal requirements for execution. There can be, for example, four Ws, etc.

 

 

Attestation Clause: W signs attesting to sig of T. NOT IN MICH

 

 

There are 3 Tests to see whether a will was properly executed

 

• Presence Test

• Too stringent

• 2 Ws had to be close enough to actually see T sign the will

• Line of Sight Test

• Must be in the line of sight to T and see that T is signing her will

• Conscious Presence Test

• Least stringent test

• By the Ws senses, W must have a sense that T is executing his will

• This is the MICH TEST!!

 

 

Some Examples

 

IE: I’m the atty

Client at home very ill

I sign as W#1

I leave client’s house

I give will to secretary

Sec calls client and asks “Did you sign your will?” Client confirms yes and so sec signs as W#2

HELD: Telephone acknowledgement is insufficient to satisfy the Conscious Presence Test. How do we know that T is the one on the phone? How do we know that the doc is sec’s hand is really the doc that T signed?

 

 

IE: Atty prepared will

Took it to ill client in hospital

Client’s name is typed on bottom

Client signed with an “X”

2 Ws attested

HELD: Will probably be accepted even though T signed with an “X” if client intended, on his own, to sign with an X

If he can’t sign, then he can direct someone else to sign for him, as well

 

 

IE: Illiterate Client that signs with an X

Make sure you read the ENTIRE document to the illiterate client

Have more than two Ws to be on the safe side

 

 

IE: Will – part is typewritten and then signed at the bottom.

On the bottom of the will, you see, in handwriting, “I give my diamond ring to X.”

HELD: Handwritten portion is not a valid clause.

Need to know WHEN T signed the will. Therefore, throw out entire will!!

 

 

Split of authority here: Depends on when T signed

Some states throw out the entire will, some throw out the handwritten portion

IMPT NOTE: If state recognizes holographic will, then this could save this will

 

 

Estate of Peters: Notary drafted will. Took will to hospital for client and 2 Ws to sign. The Ws forgot to sign, but did witness T’s sig. 18 months later, T died and widow noticed that Ws did not sign the will. HELD: Notary’s sig does not equal the sigs of 2 Ws.

 

 

RULES:

• Ws must sign w/in a reasonable time after T has signed it

• Must be a short enough time for Ws to remember all the details of the will

• NOTE: These rules do not say that Ws must sign before T’s death

 

 

Estate of Parsons: HELD: A necessary W to a will cannot receive any property under that will.

• There was no residuary clause in this will. When drafting a will, you BETTER include a residuary clause. This way, if any gifts fail, they will disposed of under the residuary clause

• The will is valid. You will not throw out the entire will if interested persons signed the will. You only throw out the gifts made to the interested persons who were also Ws.

• Therefore, if a W receives a gift under the will, then you only throw out that gift and not the entire will bcz the will itself is valid.

• Such a gift will be disposed of in the Residuary clause

• This will be on the exam

 

Purging: ask prof about this

 

Note: If you have 2 gifts and you have to purge one, you purge both of them. Problem is Cts won’t get involved in this battle

 

 

• Pure Purging: If you an interested person and you are a W, your gift is purged

• Old MICH statute: Where you kept “up to” your intestate share

• IE: If you’re one child out of four and all you get is ¼ of the estate under the will, then your gift will not be purged. As such, anything above your share under the intestacy statute will be purged

 

 

EPIC 2505 and UPC § 2-505: No purging period!!

W’s gifts will not be considered invalid simply bcz he signed and is an interested person

Double check this with prof

 

The Recommended Method of Executing a Will

 

• Encompasses rules in all 50 states and the will will be valid under the laws of all other states

 

1. If will is more than one page, all pages must be securely fastened

a. Can use staples, fasteners, ribbons, etc

b. Pages should read to indicate total number of pages, IE: 1 of 2, 2 of 2

1. Make sure client knows and understands the will

1. Be sensitive to clients that don’t read well

2. If they can’t read, then read it to them and don’t embarrass them

2. Gather everyone that is needed for the signing in one room and close the door. No one leaves the room until it’s done

1. T

2. 3 disinterested Ws

3. notary public

1. Atty can be 1 of the Ws or the notary

2. Notary can’t be a W

 

 

1. Ask T the following Qs in front of the Ws

1. Do you have a spouse, kids, grandkids, etc?

2. What are their birthdays?

3. Do you know, in general, what your assets are?

4. Have you read your entire will?

5. Does this document state what you want done with your estate/assets?

6. Would you like these Ws to witness the signing?

 

 

1. Make sure all Ws can see T sign the will

2. Have T sign

3. Have T sign or initial each page

4. Have one W read the Attestation Clause so all Ws understand what they are signing

5. have 3 Ws sign and initial each page

1. ____________ (W’s name) residing at _________ (address)

 

 

Notes

• Prof eliminates attestation clause

• If T signs a self proving Affidavit, then no Ws will be required to prove that T did in fact sign his will

• Only have T and Ws sign one original

• Do not have them sign all additional copies bcz of the revocation statutes

• Give Client some “Conformed Copies” (put /s/ on the sig lines)

• Make these copies before the will signing

 

 

Once the will is signed, there are three methods for its safekeeping

 

 

1. Client keeps the orig in a Safety Deposit Box at bank or in a fire and heat proof safe

2. Client can choose to let atty keep it IF atty has a fire and heat proof vault in the office

1. Put a tag on copies they keep w/them that say “orig is with atty”

3. Client can file the orig w/ the County Probate Ct for $25.

 

 

In Re Pavlinko’s Estate: Husband and wife had wills that mirrored each other, but they signed the other’s will by accident (spoke no English). HELD: too bad! Will could not be probated

 

 

UPC § 2-503 and EPIC 2503 Substantial Compliance and Harmless Error

 

Substantial Compliance: Functional rule designed to cure the inequity caused by “harsh and relentless formalism” of the law of wills

 

Even though the doc/will, as written, doesn’t qualify, the proponent of the will must prove by clear and convincing evidence that the D intended the doc or writing to constitute:

• D’s will OR

• A partial or complete revocation of the will OR

• Addition to or alteration in the will OR

• Formerly revoked will

• Substantial compliance makes it easier to probate other writings as wills and revocation of wills

• Pavlinko: Will could have been probated under Sub Comp but state followed a dfrn rule

 

 

What the Courts will do in case of an error:

 

IE: I give my house on 231 Maple to John

When T dies, he owned a home on 321 Maple

HELD, John gets the home on 321 Maple

Court can and will strike the ambiguous #s and give the house on Maple to John to do what T intended to be done

 

 

RULE: If there’s an ambiguity on the face of the doc, then you can bring in extrinsic evid to determine T’s intent

 

 

Q: How do you know when you have an ambiguity?

A: If the doc that purports to be the will describes two or more dfrn ppl or things that fit the description, then you have an ambiguity OR

If there’s no person or thing that fits the description, then you have an ambiguity

 

 

In Re Will of Ranney: Whether an instrument that purports to be the last will and testament that includes signs of 2 Ws on attached self proving aff, but not on the will itself can be probated

HELD: Admitted to probate after remanded to see if will complied with Sub Comp test

 

 

Self Proving Affidavit

• Sworn statement

• By W

• That will has already been duly executed

• Therefore, W swears that the will has already been witness by him

• Performs all functions of an attestation clause

• Has further effect of permitting probate w/o requiring the appearance of either W

 

 

Attestation Clause

• Attestant expresses the present intent to act as a W

• Sigs on this Aff don’t literally comply w/ the statutory requirements

• BUT, in limited circumstances, will can be probated if it substantially complies w/those requirements

 

 

EPIC 2502(b) Holographic wills – Permitted in MICH

Requirements are:

• Must be dated

• Signed by T

• No Ws needed

• Material provisions must be in T’s handwriting

• Bene names

• Who gets what/disposition of assets

• Intent that the doc constitutes a T’s will can be established by extrinsic evid, including portions of the will that are not in T’s handwriting (this last sentence exists only in Mich)

In Re Estate of Ranney: Rule is that the handwritten portions must be in T’s handwriting and must clearly express a testamentary intent

 

 

Note: Statutory Form Wills: Pre-printed do it yourself wills: Must be signed and attested to in the same manner as any attested wills

 

 

Kimmel’s Estate: T wrote a ltr to his kids and mailed it “That if anything happens, they are to get his bank acct and home.” Signed “father”

HELD: admitted as holographic will

• Ltr was testamentary in crc (look at words written)

• Sig as “father”: when taken in connection with the contents of the paper, it shows that the doc was actually signed by him

 

 

Conditional Wills

 

Will that becomes effective or terminates upon an event subsequent

IE: Someone’s going into surgery and is afraid he’s going to die

 

Note: If you’re going to execute a conditional will, be VERY specific as to when the condition will terminate or else the bene will get the estate even if you die as a result of something else and not the operation

 

 

Revocation of Wills UPC § 2-507 and EPIC 2507 How you know if an act constitutes a rev

 

All wills are subject to modification and revocation

 

 

There are 2 ways to revoke a will

• Expressly: A subsequent writing executed w/testamentary formalities EPIC 2507(1)(a)

• Must be in writing

• Must be signed with same formalities of a will

• 1^st will could have been a valid will and can be revoked by a holographic will and vice versa

• IE: Revocation by Inconsistency: EPIC 2507(1)(b)

• Will #1: House to A, Car to B, Cash to C

• Codicil: Car to D, Ring to E (Codicil says nothing about revoking Will #1)

• Therefore, will and codicil will be read together and House goes to A, Cash to C, Car to D, and Ring to E

• 2^nd doc prevails and B gets nothing!

 

 

EPIC 2507(2): If subsequent will does not expressly revoke the prior will, the execution of the 2^nd will revokes the 1^st will by inconsistency IF T intended the 2^nd will to replace, rather than supplement the 1^st will. ON EXAM

 

EPIC 2507(3): If subsequent will does not expressly revoke the prior will, but makes a complete disposition of T’s estate, then 2^nd will is presumed to replace the 1^st and revoke it by inconsistency. Presumption must be rebutted by clear and convincing evid. If not rebutted, then will #2 controls. ON EXAM

 

 

Note: If subsequent will does not make a complete disposition of T’s estate, then it is not presumed to revoke the prior will, BUT is it viewed as a codicil to the prior will

 

 

• Physical act: obliterating (scribbling all over it), destroying, burning, tearing up the will

• 2 prong test

• Must be done w/intent to revoke by the physical act

• Must be done by T OR

• By some other person in T’s presence and at T’s direction

• This is not the preferred method for revoking a will

 

 

• ORAL REVOCATION: Invalid and inoperative in ALL states

 

 

IMPT NOTE: If will was last in the possession of T, if at the time of T’s death, the will cannot be located, there’s a presumption that T destroyed the will w/intent to revoke it

 

EPIC 2507 (will be on Exam!)

 

How do you know if something’s a revocation?

 

Harrison v. Bird: T left orig will with her atty. She wanted to revoke her will so she called her atty and told him to tear it up. He did and mail the pieces to her w/a ltr. When she died, pieces were not found, but ltr was.

HELD: Presumption (rebuttable) arose that T destroyed it herself.

HELD: If T is not destroying it herself, then it must be destroyed in D’s presence and at her direction

 

 

Partial Revocation: Where T revokes part of a devise, rather than revoking the entire will

 

 

IE: Residue to A, B, C, and D

At time of T’s death, the will is found with T, and in pencil, C’s name is crossed out

HELD, C gets nothing bcz of the presumption that arises when will in T’s poss at time of T’s death: that T intended to destroy this part of her will

NOTE: If you’re in a state that doesn’t recognize partial revocation by physical act, then ignore the marks and all four take

 

 

IE: You have a valid holographic will and you are in a state that doesn’t recognize partial revocation by physical act. Some names are scribbled out on the will

 

 

HELD, If the will and the scribbles are totally in T’s handwriting, then the will is still valid, even with the scribble marks

Probate of Lost Wills

 

Lost or destroyed will w/o consent of T or destroyed w/o compliance of statute can be admitted to probate if its contents are proven by a preponderance of the evid

• Contents can be proven by copy in atty’s office

• Can be proven by testimony of sec who typed it

 

 

IE: What if house burns down and the orig will is inside?

A: Since T did not intend to revoke/destroy her will, then it’s still valid

 

 

Q: How do you probate a lost will?

 

 

If: Will was unintentionally destroyed and contents are proven under EPIC 3402, petition to probate a lost will must include:

• Complete statement of contents of the will

• Names of the subscribing Ws

• Add names of other Ws that have info on the contents of the will (the 2 Ws can be same two ppl as these other Ws)

 

 

Thompson v. Royall: T executed her will and then she wanted to destroy/revoke it. Instead of destroying the will, she kept it as memoranda in case she decided to execute a new will. HELD: Canceling words must be written on the actual words of the will or codicil and must destroy the orig words.

 

 

NOTE: If this case comes up in Mich, argue the Substantial Compliance Doc

On bar, exam, and in real life!

 

Carter v. 1^st United Methodist Church: D’s will, executed in 1963, was found in 1979 amongst her personal items (after she died). With it was a ltr: handwritten, dated 5/22/78, captioned as will, unsigned, unwitnessed. She crossed out the property disposition on the 1963 will.

HELD: Evid that she wanted to revise will, not revoke it.

General rule is that the burden of proof is on the person attacking the will offered for probate BUT where a will has been cancelled or obliterated in a material part, a presumption of revocation arises and the burden is on the proponent of the will to show that no revocation was intended

Also, cancellation marks on the 1963 will and 1978 writing rebuts the statutory presumption of revocation. Since the two were found together, this shifted the burden to caveator to prove that D would have preferred intestacy. This was unrebutted and caveator lost.

 

 

Doctrine of Relative Revocation:

 

 

• An equitable doctrine that is recognized in all states

• Use legal fiction and impose a conditional frame of mind on T such that:

• Revocation of prior will was dependant upon a subsequent act. As such, if subsequent act did not occur, then T did not intend to revoke her prior will

 

 

Therefore, look for:

• A revocation followed by a subsequent gif or document (writing, sub will, etc) that fails

 

 

Carter Case (above):

Original will: 1963 will

Revocation: scratch marks on the 1963 will

Followed by gift or doc that fails: 1978 failed and could not be incorporated into the 1963 will

Held, revocation of the 1963 will was dependent and conditioned upon the 1978 writing being incorporated into the 1963 will. Because the 1978 writing failed, T did not intend to revoke her 1963 will and die intestate. GOT IT!!

 

 

IE: “I give the sum of $1500 to my nephew Charles”: typewritten, but in handwriting, 1500 is scratched out and is replaced by $2000, where T’s frame of mind is give to give nephew more money

 

 

• In a state that recognizes holographic codicils, nephew gets 2000

• In a state that doesn’t recognize partial revocation by physical act, nephew gets 2000

• In a state that does recognize partial revocation by physical act, nephew gets zero

 

 

IE: What if T decreases the amount instead?

 

 

Q: Should we use DRR to reinstate the orig gift of $1500?

A: This goes to whether we have evid, on the face of the doc, that T intended to give nephew any money.

Only use DRR is there is evid on the face of the doc, by a preponderance, that T wanted to revise the amount given to her nephew.

REMEMBER: You always give the orig amount or zero!! NEVER give the revised amt! Oh, and if the amount is cut in half, this is evid that T would rather Donee have nothing! If the orig gift is 1000 and T reduces it to 501, then this is enough to tip the scale and give Donee the full 1000. (cheap bastard)

 

 

IE: “I give the sum of $1000 to nephew Charles.” And in handwriting, Charles’ name is scratched out and grandniece Nancy’s name is written over it.

 

 

Q: Do we have a valid, holographic codicil?

A: No, bcz standing alone, the written words do not qualify as a valid ????????

 

 

Q: Do we have a valid partial revocation?

A: Yes, use presumption that if last in T’s possession and found with T at time of death, then T intended to partially revoke that gift. NOTE: This doesn’t necessarily mean that Nancy gets it

 

 

Q: Should we impose DRR and thus give the money to Charles?

A: No, nobody gets it. Standing alone, the words do not qualify as a valid holographic codicil or will and as such, Nancy doesn’t get it. Since Charles doesn’t get it either, let it pass through the residuary clause of T’s will. If the residuary clause fails, then it passes through intestacy

 

 

Estate of Alburn:

1955 will

1959 will and in it, a revocation of all previously executed wills

T believed that the 1955 could be revived if she destroyed the 1959 will, so she did under the mistaken belief that the 1955 will could be revived. There was evid that T wanted the 1955 will to stand, so we know T did not want to die intestate

HELD: Since T destroyed the revocation of the 1955 will under the mistaken belief that the 1955 could still stand, then the 1959 will was the valid one

 

 

UPC 2-509 and EPIC 2509: Revival of a will is allowed

 

UPC 2-509: Breaks down presumptions for or against revival

 

 

If you have a gift or will that’s later revoked by any revocatory act, then the prior will remains revoked unless it is revived

 

 

a. Will

Entirely revoked

Therefore, presumption is against revival unless there’s evid, by a preponderance, that T intended to revive the prior will

 

 

versus

 

b. Will

Partially revoked

Therefore, presumption is in favor of revival unless there’s evid, by a preponderance, that T did not want the gift revived

 

 

Revocation by operation of law

 

1. By divorce: Revocation by legal effect of divorce

IE: In will, spouse gets my home, car, $. If we get divorced, the gift is automatically revoked

 

2. By subsequent marriage or birth of a child:

IE: You’re married

You write spouse 1 into the will

6 years later, you divorce spouse 1 and marry spouse 2, but you haven’t changed your will to get rid of 1 and add 2!

HELD, by operation of law, gift to spouse 1 is automatically revoked

 

Components of a Will

 

 

Integration of Wills:

• Which pieces of paper constitute as the last will and testament of T?

 

• Docs must be securely fastened together and if so, will be read together

IE: You have a 4-page will and a codicil at the time of T’s death

Therefore, integrate the 4-page will and the codicil and read the two together

 

 

Rules of Integration

• All docs must be in existence at the time of signing

• All docs must be attested to and have testamentary significance

• Such that, standing alone, these docs must be able to qualify as a valid will

 

 

Republication by Codicil

• Applies only to a prior, validly executed will

• Codicil itself, must have testamentary significance

• Will is treated as republished as of the date of the codicil

• Applies only where updating the will carries out T’s intent

• Not applied automatically

 

 

IE: Revive a purged gift

$ to Gower

Land to Alice

Signed by T and dated

Witnessed by W1, Gower, and Alice

Therefore, Since Gower and Alice are interested Ws, the will only has one W and as such, is not validly executed. Now, Alice’s and Gower’s gifts have to get purged.

 

 

Q: What if, after this, we find a codicil that says:

“diamond ring to Jill”?

Signed by T and dated

Witnessed by W1, W2, W3, and W4?

Therefore, this validly executed codicil, executed after will, is of testamentary crc and as such, the codicil republishes the orig will that failed and the Donees get their gifts.

 

 

Incorporation by Reference UPC 2-510 and EPIC 2510

 

In order to incorporate another writing into a will:

• Writing must be in existence at the time the will was signed (before will was signed)

• Writing must be properly identified or capable of identification

• NO NEED for testamentary significance

• You can incorporate ANY writing that fits these two rules

 

 

IE:

Will dated 03/25/32

Ltr dated 7/03/33

Codicil dated 11/25/33

 

 

Combine all 3 docs:

Ltr not in existence at time will was signed

Codicil republishes the validly executed will as of the date of the codicil (11/25/33)

Therefore, the will’s valid date is now 11/25/33

Since ltr is dated 07/03/33, it can be incorporated into the will

Therefore, all 3 are valid!!

 

UPC 2-513 and EPIC 2513: an Exception to our rules of Integration, Republication, and Incorporation

 

We will recognize, as a valid part of the will, a list of tangible personal property

• RULES: List must be:

• Writing +

• In T’s writing OR

• Signed by T

• Must describe the tangible personal property with enough particularity and the person the item is going to

• NOTE: You can even put labels on these items with the devisee’s name on it and this will suffice as long as you refer to a list in the will

 

 

• List can be prepared before or after the will is signed

• No Ws needed

• No testamentary crc needed

• List can include

• Car

 

 

· Can’t put:

• Cash, business, real estate, coin collection, stamps

 

 

NOTE: You BETTER put a reference to a list in every will that you write

“I may leave a list of tangible personal property” even if client says no.

 

IE:

Will: Leave ring to A

List: Leave same ring to C

 

 

The will controls even if the list signed afterwards bcz the will is testamentary in crc

 

 

Acts of Independent Significance UPC 2-512 and EPIC 2512

 

· There’s a reference in the will

· To a generalized description of property

• There’s an ambiguity. As such, you can refer to extrinsic evid to identify the will bene or property passing under the will to prove what T’s intent was

• IE: I give my 1000 to my niece Alice

• As it turns out, T has 2 nieces named Alice

• So, introduce extrinsic evid to prove which Alice T wanted the gift to go to

 

 

Pour Over Will

 

Any assets going through probate and ending up in the residue, these as get “poured over” to the trust and pass to the benes via the trust. In this case, the trust is referred to in the will and T signs the trust first.

 

Contracts relating to a Will UPC 2-514

 

• Governed by statute and K law and not by law of Wills

• Most states want clear and convincing evid as to the terms of the K

• MICH: K must be in writing

• Services rendered must be peculiar enough to require specific performance

 

 

1. K to make a will

Child says to parent “I’ll give up my job and take care of you T, if you leave me 50 grand in your will.”

If the child performs his end of the K, then he has a contractual claim against T’s estate if T did not leave 50 grand to the Child. If no clear-cut contractual language exists, sue on Quantum Meruit, which will compensate Child for services rendered.

 

 

2. K not to revoke a will

T leaves gift to A in will and then enters into a separate K with A that says T will not revoke the will or gift

 

UPC 2-514

 

• Provisions of a will stating material provisions of the K

• An express reference in a will to a K and extrinsic evid proving the terms of the K

OR

• A writing signed by T evidencing the K

 

Joint Will

• One doc

• Signed by H and W

• Language is all joint “we leave our car” “we agree this to be our will”

• If one dies, the other can change the will UNLESS there’s a solid promise, K, or clear language that says one cannot change the will (K not to revoke/amend will)

 

 

Reciprocal Wills or Mutual Wills

• Two docs

• H and W each have their own wills

• The two wills mirror each other (Pavlinko)

 

 

Via v. Putnam: Surviving spouse v T’s children of 1^st mrg. Wife 2 wasn’t in T’s will.

 

Held, can’t totally disinherit a spouse. Even if spouse is expressly excluded she will still get her statutory share after creditors, expenses, etc are paid. This is public policy

 


Chapter 5: Will Substitutes and Non-Probate Transfers

 

Wilhoit v. Ppl Life Ins Co: When you name a bene on anything and if your bene dies before you do, then there’s no bene anymore. The proceeds will not pass to the bene’s estate, but will pass through you estate instead.

 

 

Estate of Hillowitz: T was mbr of investment club. Partner agreement that widow of mbr would get mbr’s share upon his death.

Held, agreement btn club mbrs, a valid and enforceable K, created a 3^rd party bene interest in Widow. This K is a non-testamentary, non-probate transfer under UPC 6-101.

 

 

Cook v. Equitable Life: T bought a life ins policy where all changes had to be properly made. He named Wife 1 as bene. T remarried and left all to his Wife 2 and kid from 2^nd mrg.

Held, this Ct agreed with Strict Compliance. Wife 1 won and all changes had to be properly made. Rule was that Wife 2 must have made some showing that T had done everything in his power to comply w/the provisions of the K and that he was unable to change the bene through no fault of his own.

NOTE: In most states, divorce revokes a will in favor of a spouse by operation of law, BUT does not revoke the designation of the former spouse as a life ins bene

 

 

MICH: Required by statute to indicate in the divorce decree rights w/re to life insurance where one spouse was named bene. If it’s not in there, then look to the language of the life ins. K and see what its says about what will happen in case of divorce.

NOTE: In Mich, it’s very unlikely that an ex-spouse will get the life ins. $

 

 

 

 

Multiple Party Bank Accounts

 

There are 3 types of ownership

• Either A or B can make withdrawals and the survivor gets the balance

• B is not allowed to make withdrawals as long as A is alive and B gets the $ when A dies

• Done this way to avoid probate

• B is allowed to make withdrawals during A’s life BUT B does NOT get the $ when A dies

• This is an Agency Account

• Problem here is that unless it’s specified that it’s an agency acct, you’ll have a hard time proving it

 

 

UPC 6-201 Know these defs!!

 

 

• Agent:

• Party:

• Beneficiary:

 

 

UPC 2-611: Ownership rights of multiple parties during the lifetime of the parties

“Parties” refers to each person’s contribution w/exception that if they’re married

 

 

UPC 2-612: Rights at time of death

 

 

IE: Mom, dad, and their two kids A and B

If B dies, then mom, dad, and A will share equally

If dad dies, then mom owns ½ and A and B each get ¼

 

 

MCL 487.711: MI statutory joint account act—Did not adopt UPC 6-201

MI statute recognizes the 3 types outlined above

 

 

In Re Cullman’s Estate: MICH Case: Issue was how do you know what kind of bank account the person wanted to open?

 

 

Held, you have to look to D’s intent at the time the account was opened or at the time the joint account was opened.

NOTE: Statements made before or after the account is open are inadmissible as hearsay!

NOTE: There is a presumption that the account is joint with A and B having equal rights to withdraw $ and the survivor gets the balance when the other dies. To rebut this, you must prove that D did not want title to vest in the joint owner by looking at D’s intent at the time the account was open!

 

 

Joint Tenancies

 

• Joint Tenancy

• Upon death, D’s share is divided btn the others

• One can sell his/her share or interest with the permission of others

• Joint tenancy must be severed during life

• Tenancy in Common

• Upon death of a Tenant in Common, their share passes through ??

• Tenancy by the Entirety

• Can only exist btn H and W

• Neither spouse can sell their share w/o the permission of the other

• Distinguished by divorced as a matter of law

• W/re to Creditor’s rights, any creditor of either spouse can’t attach the other spouse’s share

 

 

Gifts of Personal Property (hot topic on MI bar)

 

Elements for a gift are:

 

• Donor must have intent to give a gift

• The gift must be delivered

• Actual Delivery: Donor hands it to Donee

• Symbolic Delivery: If the gift is too large to physically hand over, then Donor will deliver something that represents the gift.

• Transfer the deed to land or to a house

• Deliver stock certificates/bond certificates (for intangibles)

• Constructive Delivery: This one’s always on the bar

• IE: Aunt wants to give niece, who just got married, furniture that’s in the Aunt’s home 500 miles away. She gives niece the key to the home and tells her to go pick up the furniture.

• Of course, the niece gets on the train to go to the home and on her way, the Aunt dies.

• Gift was effective when Aunt handed niece the key and niece got on the train

• The Donor must accept the gift

• Can’t force Donee to accept gift

 

 

NOTE: Issue on the bar is always with delivery!

 

 

Revocable Trusts

 

• A non-probate transfer

• A means of avoiding probate

• A tax avoidance vehicle: limit this year is 675,000 on federal estate taxes (MI abolished the estate tax)

 

 

Pilafas: Held, terms of trust control how a trust is to be amended or revoked

 

 

NOTE: If trust does not indicate this, then a phone message or oral revocation may be sufficient

 

 

Pour Over Will

 

Assets from a will “pour over” to a trust such that these assets don’t have to go through probate, Instead, the assets pour over and pass through the trust.

Amendments to a trust will not affect/revoke the validity of a will.

HINT: When doing a trust, always do a pour over will and execute the trust first.

 

 

State St. Bank v. Reiser: Where D created an intervivos trust and owed bank $ for a loan at the time of his death, Held that Creditors can reach a trust since:

• Person opens a revocable trust

• Where D retains right to revoke/amend

• Settlor’s Cs can reach assets of trust, even though assets don’t belong to D, to the extent debts weren’t settled by D’s estate

• Bank won on public policy

• Probate Ct is one of equity

• Note: If this was an irrevocable trust, the bank would not have been able to reach the assets

 

 

Clymer v. Mayo: D created a marital trust, but at the time of her death, she was divorced from her H and the cheap bastard still wanted the $. Held, the intent of D when creating testamentary documents (trusts) is always critical. She intended for her H to get the $, not her ex-H

 

 

Also, UPC 2-804 and EPIC 2804 eliminate rights of ex-spouse’s heirs to inherit (as well as the ex-spouse)

 

 

QTIP Trust:

• Assets go into a trust, where surviving spouse gets income only during her lifetime. When she dies, the $ will go straight to the next of kin of D or to the next trust that was set up.

• Tax advantage: Gets unlimited marital deduction bcz the income’s going to D’s spouse

 

 

Power of Attorney

 

• Planning for incapacitated

• Can be sued before incapacity

• Void upon death, when your will takes over

• Very power documents

• Very common for H and W to execute them

• Can be revoked at any time

• Need 2 sigs and a notary

• Get revocation to all banking institutions right away, etc.

• Give revocation to “atty in fact/agent’

 

 

Durable Power of Attorney

 

• You must have a statement

• “this POA is intended to endure my incapacity”

• Where agent will continue to have POA over person, even after person becomes normal again

 

 

 

Springing Power of Attorney

 

• Becomes effective when one becoming incapacitated

• Prof said this one is useless and defeats its purpose, don’t use it

 

 

Note

• EPIC 5501

• EPIC 5502

• EPIC 5503: Delegation of parental authority

• Statute of minors

• To give temporary parental authority to another

• IE: to take kid to hospital or pick up from day care, etc.

 

 

If you execute a POA and then you become incapacitated, then it’s void

IE: If I execute one before I go on a trip and give parental authority to my sis and I go into a coma during my trip, then sis has to go before the Probate Ct to get appointment of Guardian so Ct can supervise it

Franzen v. Norwest Bank: POA is an instrument by which a principal confers express authority on an agent to perform certain acts or kinds of acts on the principal’s behalf: Held, terms of POA need only evidence an intention to authorize the agent to make decision concerning the principal’s interest in trusts, generally, and not necessarily a particular interest

Need same amount of mental capacity as is needed to sign a K, in order to sign a POA

 

Health Care and Disposition of the Body

 

Cruzan: Veggie state daughter and parents asked hospital to pull the plug

• Constitutional right to health care and to refuse medical treatment

• Medical right of self determination

• In order to someone lese to exercise this right (refusal of med trtmt), Ct need clear and convincing evid of patient’s wishes in the event that s/he becomes incapacitated

• Have a signed, specific document as to what you want done with your body of you were ever to go into this state (God forbid)

• NOTE: If pregnant, no one can terminate care on your behalf

 

 

• Living Will Declaration: Need two Ws

• Patient Advocate Form

• Need two Ws

• Ws can’t be heirs at law, immed. fam. mbr, medical personnel giving you care, or nurses giving you care, etc.

• Ws can be named the patient advocate, though

• Need notary

 

 

Contest of Wills

 

Plain Meaning Rule: The will is construed based on the 4 corners of the document. If there is no ambiguity, then you cannot admit parol evid to get at T’s intent.

 

 

IE: T gave A 5 thousand in the will. Cheap ass A comes along and says that T told him she was going to increase his gift to 10 thousand. Held, A gets only 5 thousand

 

 

In order to change the gift, you need:

A Holographic will OR

Subsequently executed will or Codicil

 

 

Mahoney v. Grainger: In will, T left all to “heirs at law” Will contest btn her cousins and aunt, where aunt would take priority as an heir.

Held, her aunt was her only heir at law (although she told her atty that she wanted her aunt and cousins to share it)

 

 

PLAIN MNG RULE: There is no room for extrinsic evid where no doubt exists from the face of the doc as to the property bequeathed or the identity of the bene. Only where the testamentary lang is not clear in its application to the facts that evid may be introduced as to the circumstances under which the T used that lang in order to throw light upon its meaning.

 

 

There is one exception to the plain mng rule

1. Principle of Personal Usage

• Person used a particular word

• that has a common mng

• BUT this person gives that word a dfrn mng

 

 

IE: Roy called his wife “mother” for 40 years. In his will, he left all to “mother”. In this case, you would be allowed to bring in parol evid that he had a personal usage for that term and you need to prove that he was referring to his wife, by a preponderance.

 

 

Fleming v. Morrison: T had atty draft a will that left all to Fleming, but after atty drafted it, T told atty that it was a fake, only to get Fleming to sleep with him (dirty bastard) Atty still signed as a W! Held, atty was allowed to bring in parol evid bcz here, no one was challenging the contents of the will, but the execution of the will. You can bring in as must parol evid to prove that a will was not duly executed.

 

 

Latent Ambiguity: An ambiguity that doesn’t appear on the face of the doc, but appears when the terms of the will are applied to T’s property or designated benes

 

 

Estate of Russell: T’s will said “all to Quinn and Roxy Russell” and on the back said “gift to niece”

 

 

Latent Ambiguity here. There’s no ambig on the face of the will, but it appeared during disposition bcz all found out that Roxy Russell was T’s dog! We found out who Roxy was when we went beyond the doc. As such, we were allowed to introduce parol evid to find out if there was a person named Roxy Russell.

 

 

Patent Ambiguity: An ambiguity that appears on the face of the doc.

 

 

Equivocation: Where a description fits two or more external objects equally well.

IE: $ to my niece Alice. Turns out that T has two nieces named Alice. Therefore, direct expressions of T’s intent is admissible here.

 

 

Misdescription of property: False statements may be stricken

 

 

Erikson v. Erikson: T executed a will including his fiance, got married two days later, but never referred to the mrg in his will. Issue was whether the mrg operated as a revocation of T’s will.

Issue: Whether Ct should have admitted extrinsic evid of T’s intent that his will would not be revoked automatically by his subsequent mrg.

Held, there was a drafting error by atty. Why the hell would anyone execute a will and want it revoked two days later? Doesn’t make sense.

RULE: Cts do not correct mistakes, HOWEVER, they can and do strike terms to get at T’s intent, especially if there’s a scrivenger error.

Also, argue Substantial Compliance here.

 

 

Anti-Lapse: What happens to a gift when Devisee dies before T??

 

Will: House to A

Car to B

Residue to C and D

 

 

D is personal rep and says “A died 5 years ago!”

Q: What happens to the house?

A: The gift lapses and becomes residue.

 

 

BUT, exception is the Anti-Lapse statute

 

 

• Broad Statute

• Does A have issue or heirs?

• If yes, then gift/house will be saved and will pass to A’s issue A dies first AND

• If A is issue of T

• Then house goes to A’s issue

• Narrow Statute

• Does A have issue or heirs?

• If yes AND

• If A dies before T AND

• A is issue of A,

• Then house/gift is saved and house goes to A’s issue

• If A is not T’s issue, then Anti-Lapse would not apply and gift lapses and goes through residue.

•  

   

• MICH and UPC Anti Lapse Statutes TEST

• Is Devisee, who’s named in the will and now deceased, related to T w/in the 3^rd parentela?

• Did the Devisee leave issue?

• If the answer to one of these is no, then the gift fails and goes through residue.

• If both answers are yes, then the gift is saved and it passes to Devisee’s issue.

 

 

Allen v. Talley: Will said to “my living bros and sis” 3 bros/sis died before T. Issue was whether their portions should have gone to their issue.

Held, in the absence of an ambiguity, we must construe the will based on the express language used by T. There was no ambiguity in “living bros/sis”, so issue didn’t get it.

 

 

Jackson v. Schultz: Will said “all to my wife and her heirs.” W predeceased T. Held, “and/or” can be used interchangeably to get at T’s intent. Anti-Lapse did apply.

 

 

Class Gifts

 

• Class

• Two or more persons

• with a common crcs, common thread which ties the grp together

• Bros/sis

• Sorority sisters

• Nieces/nephews

• “My friends” will NOT do! Clark v. Campbell

• NOTE: You can limit a class

• Where you see a gift given to a # of persons, argue that it was a class gift

 

• Class gift

• Aggregate sum

• to a body of persons

• all mbrs would take in equal shares

 

 

Rule of Construction: If you are trying to show that T intended to treat a grp as a class, then you are allowed to bring in extrinsic evid.

 

 

Abatement

 

• All gifts named in the will are in existence

• BUT there isn’t enough $ in the Estate to pay T’s debts, taxes, and gift (insufficiency)

 

 

 

Ademption

 

• Applies only to specific devises

• Devise still in will

• BUT, the gift no longer exist/T no longer owns the item!

• As such, devisee gets nothing

 

There are 3 types of bequests

 

 

• Specific: Bequest of a particular item or an identifiable asst

• If specific gift named in the will no longer exists, then Devisee gets nothing

• Stock, stock dividends, securities are always specific!! Bar and Exam!!

• IE: 200 shares of Ford stock to A. Ford merges and shares become 300, then A gets 300 shares of the new company’s stock

• General: General benefit or general amount of $

• “1000 to A”, but no reference is made as to which bills A will get to make the gift complete

• Demonstrative: A general gift from a specific source

• “30,000 to A from my Comerica Account”

 

 

Exceptions to the Abatement Statutes UPC 2-606 and EPIC 2606

 

• Balance of purchase price owed to T

• IE: T owns an apt bldg, gives it to A in will, T sold it on land K, Buyer made 6 payments, still owes 10 payments

• Gift has adeemed, BUT A will still get the balance owed on the land K

• Amount due from a condemnation award

• IE: T owns land of Jefferson, gives it to A in will, State uses eminent domain and takes it, but hasn’t paid T yet. If T dies before State pays T, then $ will go to A

• NOTE: If T got the check, but hasn’t negotiated it yet, then $ goes to A

• Insurance Proceeds

• Gift that gets replaced

• IE: T owns house, gives it to A in will, house burns down, T gets $ from ins. co, T buys a new house. Gift has not adeemed, A gets the new house

 

 

Abatement is on the Exam for sure!!

 

IE:

 

House at 445 Elm to A Specific 120,000

Any car I own to B Specific 23,000

My diamond ring to C Specific 4,000

Stock at GM to D Specific 18,000

20,000 to E General 20,000

30,000 from Comerica acct to F Demonstrative 30,000

there ‘s only 10,000 in the acct at the time, so 10 is specific and 20 is general

Residue to G 60,000

275,000

 

 

Gross Estate: 275,000 NEVER CHANGE THIS # ON AN EXAM!!

Debts/Taxes 135,000

Comerica Acct 10,000

 

 

Now, we need to pay T’s debts and taxes before any gifts can be distributed.

 

 

1. Since total estate is 275 and residue is 60, the total amount of gifts if 215,000

2. We need to use up T’s assets to pay T’s debts/taxes

Use 60,000 from the residue

Go to general devises and abate them

40,000 in general bequests

So,

 

 

135,000 Debts/Taxes

- 60,000 Residue

75,000

- 40,000 General bequests

35,000 We need 35,000 more to pay off all debts/taxes

 

 

Now go to the specific bequests. Divide 35,000 into 175,000. You get 20%

Take 20% out of every specific gift and put this amount towards the balance of debts/taxes owed. Here, you pro rate amongst all specific gifts.

 

 

Rights of the Surviving Spouse

 

• Pension plan: Your spouse must be named the bene on your pension plan UNLESS spouse consents, in writing, to someone else being named bene

 

 

Statutory Allowances

 

• Homestead Allowance

• Can be taken in any asset

• Still entitled to homestead allowance even if the home is jointly owned

• Under UPC and EPIC, spouse gets 15,000 homestead allowance

• Therefore, the first 15,000, apart from admin costs and expenses, go to the surviving spouse before Creditors get paid

• If there is no surviving spouse, then this $ gets paid to D’s minor OR disabled kids equally

 

 

• Personal Property Allowance

• UPC 2-403 and EPIC 2404 allows 10,000

• Family can keep the tangible personal prop of the D

• If value of pers prop doesn’t exceed or equal the allowance, then can take the allowance out of cash assets

• IE: Furniture worth 2000, so family gets 8000 in cash

• If no spouse, then it goes to the children equally

• No specification here. Can go to adult children as well before Cs get it

• Family Allowance

• UPC 2-404 and EPIC 2403

• Weekly living allowance for one year and only up to one year

• paid to surviving spouse OR minor or disabled kids

• 18,000 allowed under UPC

• “Reasonable family allowance” allowed under EPIC

 

 

• Dower

• EPIC has retained dower

• A life estate in 1/3 in the real estate acquired by the H during the mrg and inheritable by the children

• W can’t take dower AND one other allowance

• Curtesy

• No longer exists

 

 

Admin. expenses

Allowances

Funeral expenses

Federal taxes

Med bills

State taxes

Creditors

Then go to gifts to family and friends in the will

 

 

The surviving spouse’s elective share

 

• EPIC 2202

• Spouse can elect to abide by the will (done in majority of times)

• Spouse can elect against the will and take her elective share under EPIC

 

 

• Formula: ½ your intestate share reduced by ½ the property received outside of the Estate (refers to jointly held prop, Ks, life ins)

 

 

IE: 200,000 Estate where Will gives Spouse 5,000

Under intestacy, spouse gets 150,000 plus ½ the remainder

Under elec. share, spouse gets:

½ of 150,000

= 75,000 with 50,000 left over

½ of the 50,000 is 25,000

Take another ½ of the 25,000 and add that to the 75,000

= 87,500

subtract from the 87,500 the amt received by spouse under jointly held prop, etc.

And this is what the surviving spouse gets under the elective share

 

 

Augmented Estate: UPC 2-201 Not in MICH

 

• Partnership theory for mrg

• Includes all assets owned by both spouses

• Share received by surviving spouse depends on the # of years that the couple was married, up to 50%

 

 

Estate of Cross: T left all to son and nothing to W. W was in nursing home and Medicaid was paying for it. Held, W was required to elect against the will and take her elective share. This money would then pay for the nursing home instead of Medicaid. Can’t avoid incoming $ so you can remain eligible for Medicaid. Cheap old hag!

 

Estate of Cooper: A homosexual lover can’t elect against T’s will and take a spouse’s elective share, even though the two lived together like a married couple

 

 

Sullivan v. Burkin: T left nothing to spouse and transferred all his assets to an intervivos trust with someone else as bene. RULE: If it appears that T transferred his assets to an intervivos trust to hide and keep the assets from the spouse, then the innocent spouse will be able to take her elective share from assets in the trust

 

 

In Re Reynolds: Trend across the country is that they’re allowing the evasion of an irrevocable trust for purposes of calculating a surviving spouse’s elective share

 

 

Estate of Garbade: If spouse signs away her right to elect against her husband’s will in a prenup, then this will be enforceable under K law absent fraud, duress, mistake, etc

 

 

For a Valid Prenup, you need:

 

• Both parties must give full disclosure of all their assets to the other

• Both parties should have their own attys

• Ultimate disposition in the event of divorce/death must be fair and not necessarily equal

 

Pretermitted (Omitted) Spouses and Children

 

UPC 2-301 and EPIC 2301 Pretermitted Spouse Statute

 

 

• Spouse that’s married after will has been executed

• This surviving spouse is entitled to her full intestate share (this is not the same as electing against the will)

• UNLESS

• it appears from the will or other evid that will was made in contemplation of mrg to this spouse AND

• T intended that will is to stand not withstanding the mrg OR

• Surviving spouse is being provided for otherwise (life ins)

 

 

UPC 2-302 and EPIC 2302 Pretermitted Child Statute

 

 

• Children born after the execution of the will are entitled to their full intestate share

• Disinheritance of a child must be done intentionally and explicitly w/o having to explain why the child is being disinherited

 

 

2-prong attack/TEST

• Is it a child that was born/adopted after the will was executed?

• Was child living at the time the will was executed, but omitted by mistake? forgotten?

 

 

EPIC: Now, if T had a mistaken belief that child was dead at the time the will was executed, then child can attack the will. Otherwise, child gets nothing if he was just forgotten by parent

 

 

Therefore, Child born AFTER execution of will

OR

T thought child was dead when will was signed

Then, child wins.

Azcunce v. Estate of Azcunce: Good exam Q

Will 5/4/83

Codicil 1 8/8/83 *codicil republished will as of date of codicil

Kid born 3/14/84

Codicil 2 6/25/86 *Codicil republished will as of date of this codicil

*Bcz kid was born and there was no mistaken belief that she dead at the time of republication by codicil #2, she was in existence on 6/25/86. Therefore, she loses!

 

 

MICH WRONGFUL DEATH

 

Trusts: Dividing the legal and equitable interests in one’s property

 

 

Legal interest: Belongs to Trustee. Can sell/make decisions about the prop. Not allowed to enjoy the proceeds

 

 

Equitable interest: Belongs to the bene. May keep the prop w/in terms of the trust. has no right to sell it, etc.

 

 

There are only 2 broad categories /mutually exclusive trust

• Intervivos Trust

• Created and is in existence while T is alive

 

 

• Testamentary Trust

• Created in T’s will.

• But doesn’t come into existence until T’s death

 

 

Trusts can be mandatory or discretionary

 

 

There are 5 components in a trust

 

 

• Settlor

• a/k/a Grantor

• Creates the trust w/his assets/property

• Trustee

• Can be one or more

• Can be a trust corporation/bank

• has a high fiduciary duty of care to bene

• Duty to administer trust solely for benefit of bene

• Trustee must give bene an accounting

• Bene can challenge Trustee’s accounting for up to one year after the trustee has rendered an accounting. If trustee hasn’t filed an accounting, then S/L hasn’t run yet

• Can’t force anyone to be a trustee. Trustee must accept duty

• Once duty is accepted, can’t simply walk away. Need consent from settlor or Ct

• Quote this on Exam “No trust shall fail for want of a trustee” Cardozo

• NOTE: If Trustee screws around with the $, then penalty is that he must replace the missing funds AND what those funds would have earned but for their removal “projected earnings”

• Bene

• a/k/a “Cestue Que Trust”—One who benefits

• Must have at least one

• Remaindermen: Benefit after death of bene

• Intent to create a trust

• Can be an oral declaration

• Res

• Principal corpus**must fund the trust at some point in time

• If trust doesn’t include real estate, then it can be created orally, but always better to do it in writing.

 

• Real prop: Subject to Statute of Frauds

 

Hebrew Univ. v. Nye: The facts of this case today, would create a trust

 

 

• Resulting Trust

• Implied trust

• A reversionary interest

• Equitable remedy created by Ct

• Arises by operation of the law and not by a writing

• Where there’s no one for the trust assets to go to

 

 

IE: Settlor funded trust and named bene

Bene died before S

Trust silent on this issue and thus, there’s no one to give the assets to

THEREFORE, Assets revert back to S

TEST: **Bene doesn’t exist at the time a Resulting Trust is created

**Bene disclaims his interest w/in 9 months

 

• Constructive Trust

• Arises by operation of the law

• Equitable remedy created by Ct

• to prevent unjust enrichment

• no compliance with Statute of Frauds needed

• 4 part Test

• Need a confidential/fiduciary relationship

• Need an express or implied promise (to perform)

• Need a transfer of property in reliance on the promise

• Unjust enrichment to transferee

• Lots of Cts create constructive trusts for this reason alone

 

 

RES: Principal corpus

 

 

Unthank v. Rippstein: A trust must be specific as to how it’s going to be funded. Must have $ in the corpus. If you get a case like this on the exam, where the trust was silent on where the trust $ was supposed to come from, then ARG 1: It’s a holographic

ARG 2: That it was just a gratuitous promise, bcz there was no intent to create a trust f.b.o. bene

 

 

Q: How do you fund a trust?

1. Put $ in it at the time it’s created

2. Do a will at the same time and in the residue clause, say that the residue will pour over into the trust

 

 

Brainard v. Commissioner: You can put a future interest into a trust and it will still be valid

 

 

Speelman v. Pascal: T had a future right to sell a musical and make $. Letter to P created an assignment of this right under K law. Therefore, T created an irrevocable trust f.b.o. P (his slut)

 

 

Revokable Trust

• A grantor trust

• Any trust where Settlor retains powers over the trust or assets

• Income from the assets are taxable to Grantor

 

 

Clark v. Campbell: Trustee to distribute $ to “T’s friends”

Held, Bequest to friends shall fail for want of certainty as to who the benes are

RULE: If class of benes described might reasonable be said to answer the description, the power is valid (valid for power of appointment)

 

 

In Re Searight’s Estate: Honorary Trust

RULE: Can’t leave $ directly to a pet/animal, but can create an honorary trust to assure the care of that pet

 

 

Hieble v. Hieble: Oral intervivos trust of land

Oral agreements transferring real property are unenforceable for want of compliance with the S of Frauds, BUT S of F doesn’t apply to trusts arising out of operation of the law

Held, Equity should impose a constructive trust where Donee received land by deed under an oral promise to reconvey the property back to Donor (Cheap ass Donee wouldn’t convey it back and so Ct created a constructive trust) (See elements above)

 

 

Note: In order to receive equity, one must do equity (must have clean hands)

 

 

Oliffe v. Wells: For a Semi Secret Trust, where we know there’s a trust, but don’t know who the benes are, then the trust shall fail

 

 

Semi Secret Trust: Although there’s no ambiguity, the Ct will allow extrinsic evidence to get at T’s intent AND to prevent unjust enrichment

 

 

Q: How do you know if a Trust is revocable v. irrevocable?

A: Settlor must reserve the right to revoke. Otherwise, there’s a presumption that the trust is irrevocable (ON EXAM)

 

 

Discretionary Trust

• Trustee has discretion to invade the corpus for bene’s ascertainable benefits

• Used for invasion of the corpus

• in trustee’s discretion to distribute assets when requested by bene

• Trustee can say “no”

 

 

Marsman v. Nasca: Discretionary Trusts

• Trustee must exercise discretion with sound judgment

• Trust has a duty to inquire into the needs of the bene where Trust says that Trustee is supposed to distribute assets for Bene’s comfort and maintenance

• Another std, Pure Discretion,

 

 

Mandatory Trust

• Bene must receive the $ under this type of trust

 

 

Spendthrift Trust

• One or more of the benes would go through it quickly

• So Settlor sets up a stream of income for the bene

• Bene can’t accelerate payments

• Bene can’t alienate, sell, or assign his interest

• this language must be in the clause of the instrument

• Creditors can’t go after the trust assets for $ that the bene owes them

• You can’t create a spend thrift trust with your own assets so you can hide from Cs

• ONE EXCEPTION with the Cs

• IE: Bene goes to grocery store every week and picks up necessary groceries w/o pay. Store tells Trustee of Bene’s spendthrift trust “Give me the $ that Bene owes me for the groceries.” Store wins bcz Bene’s reasonable needs were being provided for with the food

• Here, the trustee was required to invade the corpus and provide for Bene’s reasonable needs and support (like Cappy in a nursing home)

 

 

Shelly v. Shelly: Bene had spendthrift trust. Issue was whether his ex-wives and kids could go after the trust assets for alimony and child support. The $ was to go to Shelly’s kid’s in case of an emergency.

• Family Ct order that he pay child support

• Family Ct order that he pay alimony

• Both ex-wives and kids won on public policy grounds

 

NOTE: Shelly is not the general rule. In Shelly, the guy skipped out and when it came time for trust assets to be distributed, he was no where to be found. so Ct ordered that the $ be paid to kids and ex-wives.

 

 

Bar Exam: Same facts as Shelly w/o the emergency clause: No alimony from trust and no child support bcz this is a discretionary trust and there’s no emergency.

 

US. v. O’Shaughnessy: Pure discretionary trust

• No std as to how and when the Trustee is to distribute the trust assets to bene

• No one can compel the Trustee to make a distribution, not even the fed gvt.

 

 

Miller v. Dept. of Mental Health (Mich App): T’s daughter in mental health home. She’s been there ever since childhood and T was supporting her, however he stopped supporting her when she turned 18.

His trust said “Trustee may distribute assets as Trustee deems necessary.” Issue was whether T intended to continue supporting daughter after his death.

Held, no bcz facts hinted that trust was purely discretionary and the $ would only have lasted another 3 years. Why would T want to support her for only another 3 years?

 

 

Trust of Stuchell: Petitioner wanted to modify trust so that the retarded child bene wouldn’t get any $ since he was getting Medicaid.

Held, one way to modify a trust is that all benes must consent. If one bene is not of sound mind and can’t consent, then no modification!

 

 

Modification of Trusts

• Settlor is dead

• All benes are of legal age

• All benes are of sound mind

• All benes agree to the modification

 

 

Notes

• Look to the trust language to see if benes can modify it.

• Can modify trust to change Trustee, where Trustee has breached a fiduciary duty, but not for mere convenience of the benes

• If Settlor indicated terms as to how the trust is to be modified/revoked, then that language controls

 

Claflin Doctrine

 

• Trust can’t be terminated prior to date for termination set by Settlor even if all benes agree if the termination would be contrary to Settlor's intent.

• IE: Trust f.b.o. kids. They don’t get corpus until they are 35 years old. Parent does this bcz he thinks kid will blow the $ at a young age. so, put it in a spend thrift trust. Here, kid may not, under any circumstances, terminate the trust before its termination date.

• Therefore, look at T’s intent. Has it been satisfied?

 

 

Charitable Trust

 

• Established

• f.b.o.

• poverty, educ, religion, health, gvtmtl or municipal purpose

• Therefore, some benefit to the public

• Not subject to the Rule against Perpetuities

• This is the only type of trust that is not subject to the Rule against P

• Can create a trust that “will continue in perpetuity”

 

NOTE:

• Cant’ create a trust and call it charitable if you’re endowing a political party

• Can’t create a trust for illegal means or for revolting against or overthrowing the govt

 

 

Shenandoah Valley v. Taylor: Trust—pay out income of trust to kids in grades 1,2,3 in the school every Easter and Xmas

• Issue: Was this a charitable trust?

• No

• Who’s supervising the kids’ use of the money to see that it gets spent on educ?

• Look at timing of payouts – X mas and Easter (sounds like a gift)

Note: If not a charitable trust, then it’s terminated “Ab Initio” (from the beginning) bcz it violated the Rule Against Perpetuities and $ then goes to the heirs under the intestacy statute

 

 

 

Rule Against Perpetuities (New Uniform Statutory Rule Against Perpetuities)

 

• Non vested

• Property interest

• is valid UNLESS

• one or more of the following apply:

 

 

1. When the interest is created, it is certain to vest and terminate no later than 21 years after the death of an individual then alive

 

 

OR (this is where the change is)

 

 

1. Interest either vests or terminates w/in 90 years of its creation

“90 years wait and see”

 

 

• Therefore, for 90 years, it’s not void ab initio

• Ask, Does it vest or terminate w/in 90 years?

• At the end of the 90 years, if the trust has terminated, the P. Ct. shall distribute the trust estate as close to the Settlor’s intent as possible.

• In Shanandoah, the P. Ct., under this new rule, would have gave the trust $ to the school so that the school could have done something to benefit the school children

• NOTE: Under old rule, the $ would pass under intestacy statute

 

 

Modification of Charitable Trusts

 

• Cy Pres: If the Settlor’s intent is impossible to achieve, we should be allowed to modify the trust

• IE: Sister Penny Foundation set up to find a cure for polio. When they did so, they petitioned the Ct for permission to modify the charitable trust and use the $ to find a cure for some other childhood disease

 

 

• Administrative Deviation

• Still possible to fulfill T’s intent, but doing so, as it’s written, is illegal.

 

 

 

 

Fiduciary Duties

 

• Duty of loyalty (most impt duty)

• Referred to as “duty of good faith and reasonableness)

 

 

• Duty not to self deal

• Can’t bargain with yourself

 

• Can’t get $ from the Estate

• Can’t purchase property from the Estate UNLESS it’s for the true FMV, BUT only if you give full disclosure to all benes and they agree, and you get the Ct’s permission

• Can’t sell something you own to the Estate or Trust

• It’s almost strict liability!! Good faith is NOT an excuse!!

 

 

• Duty to avoid conflict of interest

• You can’t represent one who has a position that’s diametrically opposed to that of the Estate that you are representing

• Can’t serve two “masters positions” bcz it’s a conflict of interest (Rothko)

 

 

• Duty to collect, invest, and protect property

• You can’t keep property in an unproductive state. Property must grow and earn interest

• If asset is $ from life ins policy, then you must invest that $

• If asset is a collectible, then use sound judgment as to whether that item should be sold and the $ invested

• Prudent Investor Rule: Requires a fiduciary to invest the assets in stocks, bonds, etc. in sound investments as a reasonable and prudent investor would invest his own funds

• Note: With a minor’s money, don’t put it in stocks or bonds. Cts want it in CD accounts

• Must diversify the investments

 

• Duty to segregate property

• No co-mingling of assets

• If you collect $ that belongs to your client and you put it in your personal or business account, then you’re in trouble!

• You can’t co-mingle the assets of different clients

• Banks, as Trustees, are the ONLY exception

• You must keep funds in the name of the bene, ward, or Estate. Must be clear to bank and anyone else that the $ is not yours

 

• Duty to render and accounting

• In Mich, it must be done at least annually

• Give the accounting to the Ct and a copy for all benes

• With a trust, send the accounting to the income benes and don’t have to send it to the remaindermen

 

• Duty not to delegate discretionary decisions

• You are able, to some extent, delegate decisions regarding investments to a qualified financial advisor

 

• Duty of impartiality

• Treat all benes equally

• How you handle receipts, expenses, income

 

 

Receipts: Income produced by the principal is allocated to the income

Asset is an apt bldg: When you collect the rent, it goes toward the income

What if you sell the parking lot adjacent to the bldg? It goes to the principal

Stock $: Principal

Interest from bank acct: Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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