TRUSTS AND ESTATES OUTLINE
HAMMOND
FALL 2012
I. Testate Estates
a. Public Policy
i. The right to take property by gift or will is a creature of law, not a natural right. Magnoun v. Bank
ii. A decedent may destroy his own property, but he cannot order his devisees or trustees to do it
iii. Shapira v. Union Nat’l Bank – Two children could only receive their shares if married to a Jewish girl. If child was not married within 7 years to Jewish girl, then gift fails and goes to Israel. Court said this was okay because Court wasn’t being asked to restrict right to marry, but rather asked to enforce a restriction on child’s inheritance. Condition was not unreasonable based on public policy (lots of Jewish people in his area, he was single/straight, and trust did not require him to divorce anyone to receive the gift)
b. Definition of Will
i. A will (along with accompanying documents) must be the final expression of a person’s intent concerning his estate wishes
c. Format of Basic Will
i. Designation as last will and testament
ii. Statement of self, family, relations, etc.
iii. Appointment of personal representative
iv. Reference to personal property memorandums, if app.
v. Testamentary gifts
1. Specific gifts
2. General gifts
vi. Residuary clause/gifts
vii. Testator’s and witness’ signatures
viii. Self-proving affidavit
d. Testator Requirements
i. Testamentary capacity in CO – at the time the will is executed, the testator must meet the Cunningham test elements + showing an absence of insane delusions that materially affect the disposition of the will + no undue influence + no fraud
ii. Age
1. 18 years or more of age who is of sound mind
iii. Mental capacity
1. Cunningham Test – This is the 5 part test in CO. It requires a positive showing that, at the time of executing the will, the Testator
a. Understands the nature of his act
b. Knows the extent of his property
c. Understands the proposed testamentary disposition
d. Knows the natural objects of his bounty (though you are not required to give them to anyone) AND
e. The will represents his wishes
2. Also, previous history of “incapacity” – use of such historical evidence when capacity is contested.
a. In re estate of Southwick – Testator declared incompetent in 1959. Regained competency 8 years later. Court said testamentary incapacity on the day the will is executed may be proven by evidence of incompetence at time prior to the date of execution.
iv. No undue influence
1. A will must be the ultimate representation of the Testator’s testamentary intent. When undue influence exists, you typically find that the testamentary plan represents the intent of someone other than the Testator.
2. Distinguish mere influence from undue influence
a. Undue influence means words or conduct, or both, which at the time of the making of a will deprived the testator of his free choice and caused the testator to make it or part of it differently than he otherwise would have
b. Mere influence – suggesting to your parents to write a will, find them a attorney and drive them to the appointment
c. Undue influence – wife is in poor health and relies on husband for everything. Without him she would be a nursing home, so she calls attorney and changes her will.
3. Factors to consider
a. Undue influence cannot be inferred solely because one or more persons may have had a motive or opportunity to influence testator in the making of his will
b. Influence gained by reason of love, affection, or kindness or by appeals to such feelings is not undue influence
c. You may consider the provisions in the will, but must consider it along with other provisions and along with all other evidence relating to the making of the will.
d. The fact that a will may contain provisions that differ from your idea what would be proper is not enough to invalidate the will for undue influence.
4. Confidential or Fiduciary Relationship
a. Definition – A confidential relationship exists whenever one person gains the trust and confidence of the other person by acting or pretending to act for the benefit of or in the interest of the other (and, as a result, is put in a position to exercise influence and control over the other).
i. Confidential relationship may arise if (In re Marriage of Page):
1. one party has taken steps to induce another to believe that it can safely rely on the first party’s judgment or advice
2. one party has gained the confidence of the other and purports to act or advise with the other’s interest in mind or
3. the parties’ relationship is such that one is induced to relax the care and vigilance that ordinarily would be exercised in dealing with a stranger
b. If you find by a preponderance of the evidence that beneficiary
i. Was a beneficiary under the will, and
ii. At the time of the preparation or execution of the will was in a confidential or fiduciary relationship with testator and
iii. Was actively involved in some way with the preparation or signing of the will, then the law presumes (and you must find) that the will was signed under undue influence.
1. You must consider this presumption together with all the other evidence in the case in determining whether or not testator did sign the will under undue influence.
5. Mortmain Statutes
a. Have virtually been eliminated in modern probate law
b. These statutes prohibited a testator from changing a will to benefit a religious organization within so many hours of death
c. This is better dealt with as undue influence now
6. Cases
a. Estate of Jake Schlagel – Testator had a long running affair. He changed his will to benefit his mistress. Mistress didn’t unduly influence because she wasn’t actively involved with the preparation or signing
b. Krueger v. Ary – Frail, old person is assisted by long-term caregiver. Caregiver takes on increasing role in eldery person’s personal and business affairs. Eventually, caregiver receives substantial gifts (intervivos and/or testamentary). Jury instructions says, you must consider this presumption with all other evidence to determine if testator signed under undue influence.
v. Lack of insane delusions
1. Definition – a persistent belief, resulting from illness or disorder, in the existence or non-existence of something, which is contrary to all evidence.
2. Typical Analysis
a. Identifying the existence of a potential delusion (was the belief eccentric or merely false?)
b. Identifying whether the delusion was potentially an insane delusion (is it contrary to all evidence?)
c. Identifying whether the insane delusion materially impacted the will
3. Just because belief is false doesn’t mean that it is an insane delusion if testator has a reasonable basis for believing this.
4. Cases
a. Barnes v. Marshall – Testator’s will consisted of a will and two codicils. Lord revealed secrets to him. This is a fine line case. You can have insane delusions, but not the point where they impact your will.
b. In Re Honigman’s Will – Testator thought wife was unfaithful and disinherits wife. Was there a reasonable basis for believing this? False beliefs are not always insane delusions. Also watch out for testator’s eccentric personality and/or eccentric gift giving scheme. Mere eccentricity doesn’t create insane delusion.
c. Breeden v. Stone – Breeden hit and killed a reporter while drunk driving, then committed suicide after writing his will. Court merged the Cunningham and insane delusion test. The question is – what is your state of mind at the time you put the pen to the paper? Doesn’t matter if you committed suicide.
vi. Lack of Fraud
1. Common-Law elements
a. False statements of material fact;
b. Known to be false by the party making the statement;
c. Made with intention of deceiving testator;
d. Caused the testator to act in reliance on the statement; and
e. Resulted in damages to the testator
2. Two Types of Fraud
a. Fraud in the execution
i. Testator was tricked into signing something that she did know was a will – or cases where one was substituted for another
b. Fraud in the inducement
i. Someone fraudulently induced the testator to make a will or a gift within the will. Testator knew she was signing a
In CO – if either Testator or witnesses forget to sign the will itself, you can borrow their signature from the self-proving affidavit.
ii. Writings intended as wills
1. Although a document, or writing added upon a document, was not executed in compliance with section 15-11-502, the document or writing is treated as if it had been executed in compliance with that section if the proponent of the document or writing establishes by clear and convincing evidence that the decedent intended the document or writing to constitute:
a. The decedent's will;
b. A partial or complete revocation of the will;
c. An addition to or an alteration of the will; or
d. A partial or complete revival of the decedent's formerly revoked will or a formerly revoked portion of the will.
2. Subsection (1) shall apply only if the document is signed or acknowledged by the decedent as his or her will or if it is established by clear and convincing evidence that the decedent erroneously signed a document intended to be the will of the decedent's spouse.
iii. Holographic Wills (handwritten)
1. Requirements
a. Handwriting requirement
i. Traditionally a holographic will was only valid if the document and signature were in testator’s own handwriting, but the UPC has relaxed this rule
ii. The signature and material portions of the document are in the testator’s handwriting (co statute)
1. dates, introductory comments are not material
b. No witnesses required
i. Less risk of forgery if in testator’s handwriting if not witnessed
ii. Also does NOT need to be notarized
c. No date required
i. But it comes in handy when determining which documents were executed on what date if multiple documents exist
d. Intent – that the document constitute the testator’s will can be established by extrinsic evidence, including for holographic wills, portions of the document that are not in testator’s handwriting
i. Broad extrinsic evidence
2. New CO statute (effective July 1, 2010)
a. In writing (same as above)
b. Signed by the testator, or in the testator's name by some other individual in the testator's conscious presence and by the testator's direction (same as above) AND
c. Either (new):
i. Signed by at least two individuals, either prior to or after the testator's death, each of whom signed within a reasonable time after he or she witnessed either the testator's signing of the will as described in paragraph (b) of this subsection (1) or the testator's acknowledgment of that signature or acknowledgment of the will; or
ii. Acknowledged by the testator before a notary public or other individual authorized by law to take acknowledgments.
d. A will that does not comply with subsection (1) of this section is valid as a holographic will, whether or not witnessed, if the signature and material portions of the document are in the testator's handwriting.
