Select Page

Wills and Trusts
University of California, Hastings School of Law
Creighton, James B.

Wills and trusts

creighton

fall 2011

Professional Responsibility

Defensive Lawyering

· Keep good documentation of client’s intent.

· Keep good documentation of actions reflecting your level of professional care.

· Don’t procrastinate b/c clients are often elderly and may die.

Joint Representation.

· Both spouses; or T & child.

· Issues of conflicts of interest and disclosure of confidential info to other client.

· Lawyer Has 4 Options:

o Separate Lawyer for each spouse. Might be best if potential for conflict exists, such as different estate plans where blended family.

o Same Lawyer Representing Each Spouse Individually.

o Joint Representation. Preferred. Conflict must waivable, and clients must sign waiver of conflicts and permissible disclosure.

o Entity Representation.

Client Requests You Serve as Fiduciary.

· Must get client’s informed consent, must not receive fee as trustee. Dangerous.

Advice to Client

§ Deaft will

§ Have a POA for health care.

§ Have a POA for financial matters.

Advice to Drafting Will.

· Extra fees imposed if die intests, so draft a will!

· Include definitions in will & trust docs, e.g., child.

Advice to Executor on Estate Distribution:

· Six months after death is far too soon to distribute anything. Do not distribute prematurely b/c will not get the money back.

· If B is in financial need, there are procedures and there are homestead exemptions.

· Inquire into potential nonmarital or ART children.

Inheritance and Relationship (Ch. 2; pp. 57-76, 91-93, 98-116)

Parent-Child Relationship UPC 1-201

· Child Excludes: stepchild, foster child, grandchild or remote descendant.

· Mother-Child Relationship: established by UPA 201(a)

(1) giving birth to child.

(2) Adjudication of maternity.

(3) Adoption.

(4) Adjuication of maternity when another is the gestational parent due to ART (surrogacy).

· Father-Child Relationship: established by UPA 201(b)

(1) Acknowledement of Paternity (unless rescinded or successfully challenged)

(2) Adjudication of Paternity (unless overturned)

(3) Adoption

(4) Man’s Consent to ART by a woman which resulted in birth of child.

(5) Marital Presumption of Paternity: Child born during marriage (even if void) to mother; or w/in 300days of death/divorce + 120 hr survival.

o Rebutted only by adjudication.

o Michael H. v Gerald D.: Man not denied DP rights by not being allowed to prove paternity. Power of presumption.

(6) Nonmarital Presumption of Paternity:

(i) After birth, he & mother married (even if void), and he voluntarily asserted paternity in public record, on birth certificate, or support proceeding; OR

(ii) For first 2 years of child’s life, he resided in the same household w/ child and openly held out child as his own.

o Rebuttable only by adjudication.

· No Distinction Based on Marital Status. UPC 2-117, p. 68

o Parent-child relationship exists b/w a child and the genetic parents, regardless of the parents’ marital status.

Adoption: Parent-Child Relationships. 2-118, p. 73

· Adoptive Parent of Adoptee 2-118, p. 73

A parent-child relationship exists be/w adoptee & adoptive parent.

Adoptive parent can inherit from or through the adopted child.

Adopted child can inherit from or through the adopted parent.

· Genetic Parent of Adoptee. 2-119, p. 73

No parent-child relationship exists b/w adoptee & genetic parent, except if adopted by stepparent.

Adopted child cannot inherit from or through the genetic parent, except if adopted by stepparent.

· Adoption by Stepparent. P. 74

o Parent-child relationship forms w/ step parent and remains w/: (1) genetic parent whose spouse is stepparent; and (2) the other genetic parent, but only for the adoptee’s right to inherit.

· Transferor Not Adoptive Parent: See 2-705(b).

· Adult Adoption.

o UPC permits adult adoptions.

· Equitable Adoption.

o In limited circumstances, courts find an equitable adoption, as opposed to legal adoption.

o Allows the child to inherit from guardian even though the guardian had not become a parent through the formal adoption procedures.

o Must prove by C&C evidence:

§ child stood from an age of tender years in a position exactly equivalent to a formally adopted child, except fot the paperwork.

§ Detrimental Reliance. (adopted by estoppel)

o UPC takes no position on this doctrine.

Assisted Reproduction: Parent-Child Relationships. 2-120 pp. 81-82.

(a) Third Party Donor. No parent-child relationship.

(b) Birth Mother: Yes parent-child relationship.

(d) H Whose Sperm Used During his Lifetime by W: Yes parent-child relationship. [see (k)]

(f) Individual consented to assis. rep. by a birth mother w/ intent to be treated as the other parent of the child: Yes parent-child relationship. Consent established if:

(1) before or after child’s birth, signed evidencing consent; or

(2) (A) functioned as a parent no later than 2 yrs after birth; (b) intended to function as parent not later than 2 years after birth but prevented by death, incapacity, or other circumstances; or (C) intended to be treated as a parent of a posthumously conceived child, if that intent is established by C&C evid.

(h)(1) Spouse of Birth Mother: Yes parent-child relationship under (f)(2)(A) or (B).

(h)(2) Deceased Spouse of Birth Mother: Yes parent-child relationship under (f)(2)(B) or (C).

(i) Ex-Spouse of Birth Mother, if divorce before eggs/sperm/embryo placed: No parent-child relationship, unless ex-spouse consented to fathering post-divorce child.

(j) Withdrawal of Consent Before Placement of eggs/sperm/embryo: No parent-child relationship, unless satisfies (f).

(k) Posthumous Conception: Parent relationship established if

· Either a signed consent by D parent that was not revoked prior to conception, OR C&C evidence of D’s intent to be parent.

AND

· In utero not later than 36 mo after death, AND born not later than 45 mo after death.

Class Gifts. 2-705

(b) Class Gifts from Parents: “child” or “issue” interpreted using intestacy rules; Exceptions: (e) & (f). p. 92

(e) Class Gifts from Nonparents [e.g., grandparent/sibling]: if use “child,” p. 98

-Marital child automatically included under marital presumption;

-Nonmarital genetic child NOT included unless any of the following functioned as a parent* before the child reached 18:

· genetic parent, relative of genetic parent, spouse/SS of genetic parent or of relative of genetic parent.

(f) -Adoptive child NOT included unless: (1) adopted before 18; (2) adoptive parent was step/foster parent; or adoptive parent functioned as a parent* before 18.

· **“Functioned as a parent” means: custodial, decision-making, caretaking, parenting, financial support, holding out child as own. UPC 2-115

Parental Inheritance From/Through Child (p. 104)

· Generally:

o Parent may inherit via intestacy from/through child, whether martital or nonmarital (maj.)

o Adoptive parent and family members (yes, inherit from child).

o Genetic parent or family members of adopted child (no, do not inherit from child.)

o Stepparent adoption – stepparent and family members (yes, inherit from child.); family members of deceased genetic parent (no.)

· Effect of Parent-Child Relationship. Entitles each to intestate succession. 2-116

· Parent Barred from Inheriting From/Through Child if: 2-114 (a)

(1) parental rights terminated and parent-child relationship not judicially reestablished; or

(2) child died before 18 yrs and C&C evid that immediately before child’s death the parental rights of the parent could have been terminated on basis of nonsupport, abandonment, abuse, neglect, or other actions or inactions of parent toward child.

· See completed Exercise p. 110 (below).

Spouse; Putative Spouse; Civil Unions; Domestic Partnerships; Coinhabitants. (pp. 110-116)

· Putative spouse: Yet if believed in good faith, but will share w/ any other spouse, apportioned as appropriat per circumstances & justice.

· Civil Unions; Domestic Partnerships: not provided for inheritance under UPC; state may provide for quasi-marital status.

· Coinhabitants: not provided for inheritance under UPC or under most states.

· Legal Marriage, sep for 5 yrs before death: Yes, except SP during separation period.

· Exercise p. 91: Bequest to Niece. I, Abdul, leave $100,000, to be distributed equally to the children of my sister, Alia. This money shall be distributed on the date 45 months after her death in order to include any child of Alia posthumously conceived not later than 36 months after her death. Any child of Alia born out of marriage and/or child of assisted reproduction of genetic relation to Alia shall be included in said class of devisees. Any stepchild, foster child, adopted-in child, and/or adopted-out child of Alia shall be excluded from said class of devisees. Should no child of Alia survive to the date of distribution of this gift, then said gift shall lapse and become part of the residue of my estate.

· Exercise p. 110: Disinheritance of Parent Argument.

Maura will argue that Finian should not inherit from Claudine’s estate.

Maura will cite UPC §2-114(a)(2): “A parent is barred from inheriting from or through a child of the parent if the child died before reaching [18] years of age and there is clear and convincing evidence that immediately before the child’s death the parental rights of the parent could have been terminated under law of this state other than this [code] on the basis of non-support, abandonment, abuse, neglect, or other actions or inactions of the parent toward the child.

First, she will argue that this statute applies to the case at hand. First, Maura will declare that Claudine was indisputably 16 years of age at his death.

Second, Maura will argue that there exists clear and convincing evidence that immediately before Claudine’s death, Finian’s parental rights could have been terminated under state law on the basis of abandonment. Maura will state that after Finian and Maura divorced, Finian abandoned Claudine. She may introduce evidence, such as testimony from life-long friends and relatives, as well as life-long educational and medical records, demonstrating that Finian had no involvement in Claudine’s life after the divorce.

Maura will argue that there is clear and convincing evidence that immediately before Claudine’s death, Finian’s parental rights could have also been terminated under state law on the basis of non-support. She may present clear and convincing evidence that Finian never paid court-ordered child support—the court order, her bank statements, and/or other financial records.

Maura will urge the court to therefore follow the rule set forth by the UPC to hold that Finian is barred from inheriting from Claudine because Claudine died before reaching sixteen years of age and there is clear and convincing evidence that immediately before Claudine’s death, Finian’s parental rights could have been terminated under state law on the bases of both support and abandonment.

Finian will argue that he should inherit one-half of Claudine’s estate.

Finian will argue that the court should not follow the UPC. First, he will argue that it is not the job of the probate court to make termination of parental rights decisions, but, rather, to redistribute property at death. Second, he will argue that the UPC provision is contrary to traditional American inheritance law as it is behavioral- rather than status-based. And, third, he will argue that, as the marital parent of Claudine with full parental rights at the time of Claudine’s death, he should inherit one-half of Claudine’s estate.

Finian will argue that, even if the court follows the UPC, he should inherit one-half of Claudine’s estate because no clear and convincing evidence exists to prove that, immediately before Claudine’s death, his parental rights could have been terminated under the law of the state on the basis of non-support or abandonment. He may introduce evidence—testimony of friends and family, financial documents, etc.—that he supported Claudine and was present in Claudine’s life up until the divorce, which he may argue constituted a substantial period of Claudine’s life. Further, he may tactically undermine the evidence Maura has introduced such that it does not meet the clear and convincing standard.

Intestacy (Ch. 3; pp. 117-166)

Intestate Estate. Any part of a D’s probate estate not disposed of by will (or by a premarital agreement) passes by intestate succession to D’s heirs. 2-101

Share of Spouse. The share of SS is: 2-102

(1) the entire estate if:

(i) no descendant or parent survives the D; or

(ii) all of D’s surviving descendants are also descendants of SS and no other descendant of the SS survives D (irrelevant if parent survives);

(2) 1st $300,000 [+COLA], plus ¾ of any balance of intestate estate, if: No descendant of D survives D, but a parent of D survives D.

(3) 1st $225,000 [+COLA] plus ½ of any balance of the intestate estate, if: All of D’s surviving descendants are also descendants of SS, AND… …SS has 1+ surviving descendants who are not descendants of the D.

(4) 1st $150,000 [+COLA], plus ½ of any balance of the intestate estate, if: 1+ of D’s surviving descendants are not descendants of the SS.

Share to Lineal Descendants. 2-103

(a) Any part of intestate estate not passing to a SS under 2-102, or the entire intestate estate if no SS, passes as follows:

(1) to the D’s descendants by representation;

(2) if no surviving descendant, to D’s parents equally if both survive, or to surviving parent if only one survives;

(3) if no surviving descendant or parent, to descendants of D’s parents or either of them by representation;

(4) if no surviving descendant, parent, or descendant of parent, but D is survived on both pat & mat sides by 1+ grandpars or descendants of grandpars:

(A) ½ to D’s paternal grandparents equally if both survive, to the surviving paternal grandparent is only one survives, or to the descendants of D’s paternal grandparents or either of them if both are deceased, the descendants taking by representation; and

(B) ½ to D’s maternal grandparents equally if both survive, to the surviving maternal grandparent if only one survives, or to the descendants of D’s maternal grandparents or either of them if both are deceased, the descendants taking by representation;

(5) if no surviving descendant, parent, or descendant of a parent, but D is survived by 1+ grandpars or descendants of grandpars on pat but not on mat side, or on mat but not on pat side, to the

one owner w/ a present interest in the account. 6-201(5)

i. 4 types: TIC (probate), JT (nonprobate), POD designation (nonprobate), convenience account (probate).

ii. Estate of Helen Butta: Banking law presumption that JT, not convenience account.

7. Security Accounts

8. TOD Real Estate Deeds.

Overriding Will Substitute Designation.

§ When will statute automatically revoke beneficiary?

§ Can trust, will, or other method change the beneficiary? Does it matter if change specifically identifies will substitute or not?

§ Safest way to change designation w/ a third party?

§

Gifting,

§ Methods: (1) Fee Simple, (2) Gifts into irrevocable trusts.

§ Elements of a Valid Gift (State Law Issue).

o Donee must prove by C&C evidence to establish:

1. Donative Intent Evidence: Deed, testimony, history of giving, fractional interest w/ retention of asset.

2. Delivery of Gift (or deed) Evidence: Testimony; Paper delivery sufficient, need not deliver the physical property itself. Genecin. However, argument for physical delivery is protection against fraud.

3. Acceptance by Donee Evidence: Accepance of paper.

o Estate of Genecin. P. 198: Dispute over whether gift delivered. Physical delivery important to protect against fraud. Here, valid delivery.

· A gift of a remainder interest, when the devisor retains a life interest, bypasses probate upon the devisor’s death and goes directly to the devisee.

Can a Will or a Divorce Change a Will Substitute’s Beneficiary Designation? P. 213

§ Will?

o POD Beneficiary/ROS Acct: No. Must strictly or substantially comply w/ policy terms in order to alter B. 6-213(b) Lincoln Life v. Caswell. p. 213

o Other Will Subs: Probably Not. No statutory provisions exist for other will substitutes.

o Irrevocable Trust: No.

o Revocable Trust: Yes. If the will/codicil is properly executed and expressly refers to the trust or specifically devises ppty that would have otherwise passed according to the terms of the trust, can change the B of revocable trust. UTC 602

§ Divorce? Divorce auto revokes ex-spouse from B desig (2-804). Except: Divorce does not revoke ex-spouse from B designation of ERISA Retire Accts. Egelhoff

Creation of Trusts (Ch. 5; 221-286).

Generally:

· A trust is a separate legal entity that must file tax returns (form 1041), unless Revocable Living Trust (then on Settlor’s 1040).

Types of Trusts.

1. Private Express Trusts. Created intentionally by ppty owner for private B(s). Most trusts we discuss in this course are private express trusts.

a. Revocable (Living) vs. Irrevocable.

b. Inter Vivos vs. Testamentary.

c. Self-Trustee (Declaration of Trust) vs. 3rd Party Trustee (Trust Agreement or Deed of Trust)

d. Pour Over Will.

e. Standby Trust: receives ppty from D’s probate estate (via pour-over will) & other non-probate assets (e.g., life insur, retire plans, etc.)

2. Charitable Trusts.

3. Constructive Trusts.

4. Resulting Trusts. When express trust fails b/c no longer valid purpose, ppty returns to settlor/estate. UTC doesn’t apply to resulting trust.

Purposes of Trusts:

1. Avoid Probate. If all included.

2. Avoid Ancillary Probate For real estate located in other states.

3. Save Taxes Income & transfer.

4. Qualify for Gov’t Benefits

5. Plan for Incapacity. Identify Guardian/Conservator in the case of settlor’s incapacity.

6. Plan for Disability. Provide for supplemental needs of disabled person. .

7. Plan for Elderly or Minors. Professional management for elderly, minors, or those without experience.

8. Asset Protection

9. POA. Allows post-creation determination of needs of Bs by one with POA.

10. Easy Mofidication. Easier to modify than a will.

Incidents in Ownership of Property.

· Legal Ownership:

o Right to sell/exchange

o Right to Encumber

o Right to Lease or Improve

o Right to Insure Ppty from Loss

· Beneficial Ownership:

o Right to reside in the ppty.

o Right to receive income earned from the ppty.

Trust Laws that Cannot be Overruled by Trust Agreement:

· Elements required to create a trust.

· Trustee’s Duties to Qualified Bs: (1) Good Faith, (2) Loyalty (act in interest of Bs), and (3) Disclosure (to keep Qualified Bs informed about trust)

· Court’s power to take action wrt the trust that is necessary in the interests of justice.

· Limitations on the settlor’s ability to exculpate the trustee.

Elements of a Trust. UTC 402(a)

1. Valid Purpose. Valid and Legal Purpose.

2. Capacity. Settlor Competent when Creating the Trust.

3. Trustee. Trustee has duties; and No Merger (same person isn’t sole trustee & sole B—although many states abrogate merger).

4. Intent. Settlor’s Intent to create a trust.

5. Corpus. Trust must be funded. When 3rd party trustee, need effective transfer of ppty & acceptance by trustee.

6. Beneficiary. Must identify ascertainable B [or charitable trust, trust for animal, or noncharitable trust for purpose under 408 & 409].

(1) Valid Purpose

(1) Not funding illegal activity.

(2) Not in fraud of creditors.

(3) Not against public policy (e.g., encouraging divorce).

(2) Capacity.

· Testamentary Trust AND Revocable Inter Vivos Trust: capacity required is same as for drafting will. UTC 601

Settlor must: POPI:

(1) P – know the nature and extent of the property,

(2) O – understand the natural objects of his bounty,

(3) P – Must develop a plan, and

(4) I – Must understand how all these interrelate.

· Irrevocable Inter Vivos Trust:

(1) Competent to enter into K, and

(2) Consider effect that creating trust will have on financial security (higher standard).