Wills and Trusts Outline

Wills and Trusts – Janssen – Spring 2011 – Outline
 
1.      Exam Information:
A.     IRAC
B.     Exam 4, Open Mode
C.     3 hour exam, enough time, but not abundant time
1.      Don’t spend a lot of time on the multiple choice, do the ones you know, then do the essay, then go back and think about the MC
2.      The time he recommends on a problem is how many points he will assign to the problem
 
2.      Definitions:
A.     Ademption: The destruction or extinction of a testamentary gift by reason of a bequeathed asset's ceasing to be part of the estate at the time of the testator's death; a beneficiary's forfeiture of a legacy or bequest that is no longer operative.
1.      There are two theories of ademption.
a.      Under the identity theory of ademption, a devise of a specific piece of property will fail if that property is not a part of the testator's estate upon his or her death.
b.     Under the intent theory of ademption, by contrast, when a specific devise is no longer in the testator's estate at the time of his or her death, the devisee will receive a gift of equal value if it can be proved that the testator did not intend the gift to be adeemed.
1)     The intent theory has been codified in § 2-606 of the 1990 Uniform Probate Code.
2.      Also termed extinguishment of legacy. Cf. ABATEMENT; ADVANCEMENT (4); LAPSE (2).
3.      Ademption by Extinction: An ademption that occurs because the unique property that is the subject of a specific bequest has been sold, given away, or destroyed, or is not otherwise in existence at the time of the testator's death.
4.      Ademption by Satisfaction. An ademption that occurs because the testator, while alive, has already given property to the beneficiary in lieu of the testamentary gift.
B.     Advance directive. A document that takes effect upon one's incompetency and designates a surrogate decision-maker for healthcare matters.  A legal document explaining one's wishes about medical treatment if one becomes incompetent or unable to communicate.
1.      The Uniform Health-Care Decision Act (1993) states that the power of attorney for healthcare must be in writing and signed by the principal. Unless otherwise stated, the authority is effective only upon a determination that the principal lacks capacity, and it ceases to be effective once the principal regains his capacity. The agent must make decisions in accordance with the principal's relevant instructions, if there are any, or in the principal's best interests.  –
2.      Also termed power of attorney for healthcare; healthcare proxy. 
C.     Affinity: relationship by marriage
D.     Ancestors (above)
E.      Attested Will: will signed by witnesses
F.      Attorney. Strictly, one who is designated to transact business for another; a legal agent
G.     Bequeath. To give property (usu. personal property) by will, usually other than money (giving money is a legacy)
H.     Codicil: a testamentary instrument ancillary to a will
I.        Collateral Kindred: Persons related by blood, but are not descendents or ancestors
1.      First line Collaterals would be bros and sis
2.      Second line collateral would be cousins
J.       Collaterals (side)
K.     Consanguinity: relationship by blood
L.      Conservation Easement: A conservation easement (or conservation restriction) is a legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conservation values.  It allows you to continue to own and use your land and to sell it or pass it on to heirs.
M.    Constructive Trust. An equitable remedy that a court imposes against one who has obtained property by wrongdoing.
1.      Also termed implied trust; involuntary trust; trust de son tort; trust ex delicto; trust ex maleficio; remedial trust; trust in invitum.
2.      “A constructive trust is the formula through which the conscience of equity finds expression.  When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.” Beatty v. Guggenheim Exploration Co., 122 N.E. 378, 380 (N.Y. 1919) (Cardozo, J.).
N.     Curtesy.  At common law, a husband's right, upon his wife's death, to a life estate in the land that his wife owned during their marriage, assuming that a child was born alive to the couple.
1.      This right has been largely abolished
O.     Death Tax: = Estate Tax = A tax imposed on the transfer of property by will or by intestate succession
1.      Compare with “inheritance tax”
P.      Descendents (below)
Q.     Devise. To give (property) by will. The modern convention sets apart 'devise' for 'realty' and 'bequeath' for 'personalty'
1.      A person dying testate devises real property to devisees and bequeaths personal property to legatees
R.     Devisee. A recipient of property by will. Cf. LEGATEE.
1.      First devisee. The first devisee designated to receive an estate under a will.
2.       Next devisee. The devisee who receives the remainder of an estate in tail, as distinguished from the first devisee.
3.       Residuary devisee. The person named in a will who takes the testator's property that remains after the other devises.
S.      Disclaimer. A renunciation of one's legal right or claim, treated as is predeceased 
1.      See “disclaimer” in Wills and Trusts Outline
T.      Discretionary trust. 1. A trust in which the settlor has delegated nearly complete or limited discretion to the trustee to decide when and how much income or property is distributed to a beneficiary.
U.     Dower. At common law, a wife's right, upon her husband's death, to a life estate in one-third of the land that he owned in fee.
1.      With few exceptions, the wife could not be deprived of dower by any transfer made by her husband during his lifetime.
2.      Most states have abolished dower
V.     Elective Share.  The percentage of a deceased spouse's estate, set by statute, that a surviving spouse (or sometimes a child) may choose to receive instead of taking under a will or in the event of being unjustifiably disinherited. — Also termed forced share; statutory share; statutory forced share. 
1.      “In many states, common-law dower and curtesy have been replaced by statutes that make the surviving spouse an 'heir' of the deceased spouse and fix a minimum percentage of the decedent's estate (real and personal) to which the survivor will be entitled regardless of efforts of the deceased spouse to prevent it by will.  This statutory minimum — called the statutory forced share — is typically an estate in fee simple, not merely a life estate.  A serious disadvantage to the surviving spouse under many of these statutes, however, is that the minimum percentage applies only to property owned by the decedent at death. Both husbands and wives can, under such statutes, defeat their spouses' forced shares by inter vivos transfer.”  Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests 37-38 (2d ed. 1984).
W.   Escheat. 1. Hist. The reversion of land ownership back to the lord when the immediate tenant dies without heirs. 2. Reversion of property (esp. real property) to the state upon the death of an owner who has neither a will nor any legal heirs.
X.     Estate tax. A tax imposed on the transfer of property by will or by intestate succession. — Also termed death tax; death duty.  Estate tax is imposed on the decedent's estate
Y.     General Devise:  property with a certain value or just money; e.g., I give $100,000 to A [any property in estate can be used to give this value to A] 1.      If this devise lapses [bene dies before testator] devise falls into residue
Z.      Grantor trust. A trust in which the settlor retains control over the trust property or its income to such an extent that the settlor is taxed on the trust's income. • The types of controls that result in such tax treatment are set out in IRC (26 USCA) §§ 671-677. An example is the revocable trust.
AA.           Heir. 1. A person who, under the laws of intestacy, is entitled to receive an intestate decedent's property. Cf. ANCESTOR. — “Laymen wrongly assume that one who receives real property by will is an heir.  Technically, the word 'heir' is reserved for one who receives real property by action of the laws of intestacy, which operate today only in the absence of a valid will.”
BB.Holographic Will: will entirely in the handwriting of the testator
CC.Inheritance tax. 1. A tax imposed on a person who inherits property from another (unlike an estate tax, which is imposed on the decedent's estate).
1.      There is no federal inheritance tax, but some states have an inheritance tax (though it is creditable or deductible under the federal estate tax).
2.      Also termed succession tax
DD.           Interested Person: includes heirs, devisees, children, spouses, creditors, beneficiaries, and any others having a property right in or claim against a trust estate or the estate of a decedent, ward, or protected person which may be affected by the proceeding.  It also includes persons having priority for appointment as personal representative, and other fiduciaries representing interested persons.  The meaning