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Trusts And Estates Outline

Law Outlines > Trust and Estates (Duke Twiddy) Outlines

This is an extract of our Trusts And Estates document, which we sell as part of our Trust and Estates (Duke Twiddy) Outlines collection written by the top tier of Duke University School Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Trust and Estates (Duke Twiddy) Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Note: stroken-through sections are covered in class but will not be tested in the exam.

Contents I.

Introduction.......................................................................................................... 3 a.

Freedom of disposition...................................................................................... 3

b.

Mechanics of succession...................................................................................3

c.

An estate planning problem p.981....................................................................4

d.

Professional responsibility................................................................................. 5

II. Intestacy: An Estate Plan by Default....................................................................5 a.

Estate plan by default....................................................................................... 5

b.

Basic structure of intestate succession.............................................................6

c.

Transfers to Children......................................................................................... 8

d.

Bars to succession.......................................................................................... 11

III. Wills: formalities and forms............................................................................. 12

a.

Execution of wills............................................................................................ 12

b.

Revocation of a will......................................................................................... 15

c.

Components of a will....................................................................................... 18

d.

Contracts relating to a will..............................................................................19

IV. Capacity and will contests.............................................................................. 19

a.

Capacity to make a will...................................................................................19

b.

Undue influence.............................................................................................. 20

c.

Duress............................................................................................................. 22

d.

Fraud............................................................................................................... 22

e.

Tortious interference [a tort claim]..................................................................22

V. Wills: construction.............................................................................................. 22 a.

Mistake or ambiguous language.....................................................................23

b.

Death of beneficiary before death of testator [SUMMARY p. 373]...................23

c.

Changes in property........................................................................................ 24

VI. Trusts: characteristics and creation.................................................................26

a.

Trust in American law...................................................................................... 26

b.

Creation of a trust........................................................................................... 27

VII. a.

Nonprobate transfers and planning for incapacity..........................................29 The rise of nonprobate succession..................................................................30 1

b.

Revocable trust............................................................................................... 30

c.

Will and other will substitute...........................................................................31

d.

Planning for incapacity.................................................................................... 33

VIII. Protection of the spouse and children.............................................................33

a.

Protection of spouse from intentional omission..............................................33

b.

Intentional omission of a child........................................................................35

c.

Community property....................................................................................... 35

d.

Protection against unintentional omission......................................................35

IX. Trusts: fiduciary administration.......................................................................36

a.

Duty of loyalty................................................................................................. 36

b.

Duty of prudence............................................................................................ 36

c.

Duty of impartiality......................................................................................... 38

d.

Duty to inform and account............................................................................39

X. Alienation and modification................................................................................ 39 a.

Alienation of beneficial interest.......................................................................39

b.

Modification and termination..........................................................................39

c.

Trustee removal.............................................................................................. 40

XI. Eliminated....................................................................................................... 40

XII. Powers of appointment................................................................................... 40

a.

Purpose, terminology and types of powers.....................................................40

b.

Tax considerations.......................................................................................... 41

c.

Creditor rights................................................................................................. 42

d.

Exercise of a power......................................................................................... 42

e.

Failure to exercise a power.............................................................................. 43

XIII. Trust: construction and future interests..........................................................43

a.

Future interests handout [can bring to exam].................................................43

XIV. Rule against perpetuity................................................................................... 43

a.

Policy against remote vesting.........................................................................43

b.

Common law rule............................................................................................ 43

c.

Reform............................................................................................................ 44

XV. Parts of textbook not tested in exam..............................................................44

2 I.

Introduction a. Freedom of disposition

i. Three options:

1. Forced succession

2. Freedom of disposition a. U.S. adopts this approach, tempered by certain mandatory succession rights for spouses and by wealth transfer taxation.

3. Confiscation by the state ii. Restrictions on freedom of disposition

1. Spousal rights

2. Creditors' right

3. Unreasonable restraints on alienation or marriage a. Shapira: requiring son to get married only with a Jewish girl is a valid condition b. Shapira: a restraint unreasonably limits the transferee's opportunity to marry if a marriage permitted by the restraint is not likely to occur c. Unreasonable examples: i. Forcing a gay man to get married with woman ii. Give house to the son if he burns the house down

4. Provisions promoting separation or divorce

5. Impermissible racial or other categoric restriction

6. Provisions encouraging illegal activity

7. Rules against perpetuities and accumulations iii. Incentive trusts

1. Encourage the beneficiaries to pursue an education

2. Religious beliefs

3. Encourage a productive career b. Mechanics of succession

i. Probate property is property that passes through probate under the decedent's will or by intestacy. Property that the decedent held alone or as a tenant in common is subject to probate.

1. Probate: in one person's name only

2. Non-probate: has a designated beneficiary or in two person's name as joint owner. ii. Non-probate property is property that passes outside of probate by way of a will substitute. Non-probate succession has become the norm. see p.42 for examples:

1. Inter vivos trust: preferred type of trust a. testamentary trust is probate b. only intervivos trust is non-probate 3

2. Pay-on-death (POD) contracts a. Life insurance: benefits will be paid to the beneficiaries selected by the insured.

3. transfer-on-death contracts (TOD) a. Life estate is a type of TOD contract

4. Joint tenancy: joint tenants hold the property concurrently. a. Right of survivorship: upon the death of one joint tenant, his fractional share is extinguished and the shares of the surviving joint tenants are recalculated. b. E.g. tenant of entirety (it includes survivorship) iii. Probate terminology

1. Personal representative: oversees the winding up of the decedent's affairs. When a person dies and a decision is made to probate his estate, someone---usually a family member---will petition a court in the decedent's state of domicile to appoint a "personal representative" to handle the work.

2. Testate: die with a will

3. Executor: executor named in the will

4. Administrator: if no executor named, or dies intestate, court appoint an administrator

5. Person dying testate devise real property to devisee; and bequeath personal property to legatee

6. For persons dying intestate, real property descend to heirs and personal property distributed to next-of-kin iv. Is probate necessary?

1. Probate can be avoided provided the client during life arranges to transfer all of his property by way of nonprobate modes of transfer. c. An estate planning problem p.981

i. A look at the will

1. Standard language: a. Declare to be my last will b. Revoke any and all other wills

2. Article FIRST: a. Yes it does. Required to pay off mortgage on the house. (it also depends on the state law) b. Yes, need to pay tax

3. Article SECOND and FIFTH a. No, in this case the court will appoint one

4. Article FOURTH a. We don't know

5. Article SIXTH a. Not desirable 4

ii. Additional Information on the family and their property

1. For purposes of this will, "my children" include Michael a. Otherwise Michael would not receive anything

2. "grandchildren" include Andy

3. Trust provision: Candace can't be trustee

4. We can also get a living trust and put the above information in a living trust to avoid putting them in a public record d. Professional responsibility

i. Duties to intended beneficiaries

1. Protection against reasonably foreseeable harm ii. Conflicts of interests

1. An attorney, on commencing joint representation of co-clients, should agree explicitly with the clients on the sharing of confidential information II.

Intestacy: An Estate Plan by Default a. Estate plan by default

i. American intestacy law generally favors the decedent's spouse, then descendants, then parents, and then collaterals and more remote kindred ii. Partial intestacy: if the Will does not have a residual clause, then intestate law will govern the unnamed asset iii. Purpose: to carry out the probable intent of the typical intestate decedent. iv. If there are no surviving relations within the degree of kinship specified by intestacy statute, the decedent's property escheats to the state v. Applicable law:

1. The law of the state where a decedent was domiciled at death governs the disposition of the decedent's personal property

2. law of the state where the decedent's real property is located governs the disposition of real property vi. Summary of UPC intestacy provisions pp.67-69

1. 2-102 surviving spouse's share

2. 2-103 share of heirs other than spouse

3. Summary on p69 vii. No living person has heirs

1. A person named in a will is a devisee, legatee, or beneficiary, not an heir. b. Basic structure of intestate succession

i. Surviving spouse

1. In most states, the surviving spouse receives at least 1/2 of the decedent's estate 5

2. Simultaneous death: a. UPC: 120-hour survivorship rule: must survive by 120 hours (5 days) b. must establish survivorship by clear and convincing evidence

3. Informal or invalid marriage a. De minimus error when getting married ? still considered married b. If in the process of divorce when someone died: if not divorced yet, then they are still married c. Putative spouse: couple goes through marriage ceremony, but for some reason marriage is voidable. Still valid, as long as one of the parties reasonably believes in good faith that the marriage is valid.

4. Same sex marriage: depends on if the state recognizes same sex marriage ii. Descendants

1. FINAL EXAM!!! Taking by representation: when one of several children has died before the decedent, leaving descendants, child's descendants shall represent the dead child and divide the child's share among themselves.

2. General rules: a. English=modern if there is a surviving second generation (child level) b. a descendant with a living ancestor gets nothing (e.g. I on Figure 2.7 on p84) c. extinct line is ignored (e.g. Z on Figure 2.7 on p84)

3. Three types of representation a. English per stirpes: treats each line of descent equally. The property is divided into as many shares as there are living children of the designated person and deceased children who have descendants living. The children of each deceased descendant represent their deceased parent and are moved into their parent's position beginning at the firest generation below the designated person. i. Look at picture on p82: D gets 1/2, E and F gets 1/4
ii. Figure 2.5 p83, if we kill D: two shares between B and C ? E gets 1/2, F and G gets 1/4

1. Extinct line D is ignored b. Modern per stirpes: the decedent's estate is divided into shares at the generational level nearest to the decedent in which one or more descendants of the decedent are alive.

6 i. If a child survives the decedent, SAME AS ENGLISH ii. P82: D, E and F each gets 1/3 (p. 82) c. UPC: the initial division of shares is made at the closest generation in which one or more descendants are alive (as under modern per stirpes), but the shares of deceased persons on that level are treated as one pot and are dropped down and divided equally among the representatives in the next generation. i. look at picture on p. 83: ii. D gets 1/3; EFG each gets 2/3*1/3=2/9 d. Problem 1 at p84 i. English: B=1/2, C=1/2

1. D=1/2

2. F=1/2*1/2=1/4

3. G=H=1/8 ii. Modern: D=E=F=1/3

1. G=H=1/6 iii. UPC: D=E=F=1/3

1. G=H=1/6 e. Problem 2 at p84 i. I won't take a thing because F is alive ii. Z has no issue, extinct line is ignored iii. English: B=C=Z=1/3 f. Example p.86-87 figure 2.9 g. Representation i. If a will says "per stirpes"

1. Some states: same representational system as provided by the state's intestacy laws

2. Other states: courts read "per stirpes" to mean English per stirpes, regardless of the form of representation provided for by the state's intestacy law. iii. Ancestors, Collaterals

1. Parents a. See chart p69

2. Other ancestors and collaterals a. All persons related to the decedent but who are not descendants or ancestors are called collateral kindred. b. Descendants of the decedent's parents, other than the decedent and the decedent's descendants are called firstline collaterals.

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