1. Trusts & Estates Essentials Power Point Slides Class #11
NATIONAL STICKY BUN DAY

2. Integration & Incorporation
UNIT TWO: WILLS
CHAPTER 5
WILLS: COMPONENTS & PROVISIONS
Integration & Incorporation
Problem 5.3 (W200)

3. Problem 5.3 LAST NAMES Q-W
S’s valid will, dated 2/24/16, leaves a silver ring “in accordance with a writing that will be found in the small pocket of my backpack, which is in a closet in my attic.” After S dies, a handwritten note is found exactly where S described. It states: “After I die, I leave my silver ring to A,” and is signed and dated 2/26/16.

4. i) Does will incorporate note by reference?
Problem 5.3 LAST NAMES Q-W
S’s valid will, dated 2/24/16, leaves a silver ring “in accordance with a writing that will be found in the small pocket of my backpack, which is in a closet in my attic.”
After S dies, a handwritten note is found exactly where S described. It states: “After I die, I leave my silver ring to A,” and is signed and dated 2/26/16.
i) Does will incorporate note by reference?

5. Problem 5.3 LAST NAMES Q-W
S’s valid will, dated 2/24/16, leaves a silver ring “in accordance with a writing that will be found in the small pocket of my backpack, which is in a closet in my attic.”
After S dies, a handwritten note is found exactly where S described. It states: “After I die, I leave my silver ring to A,” and is signed and dated 2/26/16.
i) Can’t use incorporation by reference; note not in existence when will executed.
ii) Is note enforceable as a codicil (if state recognizes holographic wills)?

6. iii) Is note enforceable as an act of independent significance?
Problem 5.3 LAST NAMES Q-W
S’s valid will, dated 2/24/16, leaves a silver ring “in accordance with a writing that will be found in the small pocket of my backpack, which is in a closet in my attic.”
After S dies, a handwritten note is found exactly where S described. It states: “After I die, I leave my silver ring to A,” and is signed and dated 2/26/16.
ii) Enforceable as holographic codicil (handwritten, signed, shows testamentary intent. Doesn’t have to refer to will.)
iii) Is note enforceable as an act of independent significance?

7. iii) Not Act of Independent Significance; only purpose testamentary.
Problem 5.3 LAST NAMES Q-W
S’s valid will, dated 2/24/16, leaves a silver ring “in accordance with a writing that will be found in the small pocket of my backpack, which is in a closet in my attic.”
After S dies, a handwritten note is found exactly where S described. It states: “After I die, I leave my silver ring to A,” and is signed and dated 2/26/16.
iii) Not Act of Independent Significance; only purpose testamentary.
iv) Is note enforceable as a separate writing passing tangible personal property?

8. Problem 5.3 LAST NAMES Q-W
S’s valid will, dated 2/24/16, leaves a silver ring “in accordance with a writing that will be found in the small pocket of my backpack, which is in a closet in my attic.”
After S dies, a handwritten note is found exactly where S described. It states: “After I die, I leave my silver ring to A,” and is signed and dated 2/26/16.
iv) Note is enforceable as a separate writing passing tangible personal property. It is signed, OK if written after will referencing it; will describes gift and location of note.

9. WILLS: COMPONENTS & PROVISIONS
UNIT TWO: WILLS
CHAPTER 5
WILLS: COMPONENTS & PROVISIONS
Other Provisions (§5.5)
5.5.1 No Contest Clauses
5.5.2 Minor Children
5.5.3 Just Debts

10. Other Provisions No Contest (In Terrorem) Clauses: Two Examples

11. Other Provisions No Contest (In Terrorem) Clauses: States Split on Rule
Fl. Stat. §  Penalty clause for contest.—A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable.
UPC § Penalty Clause for Contest. -- A provision in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings.
Probable Cause = “evidence that “would lead a reasonable person, properly informed and advised, to conclude that there is a substantial likelihood that the contest will be successful.” See Shumway

12. Other Provisions No Contest (In Terrorem) Clauses: States Split on Rule
Fl. Stat. § Penalty clause for contest.—A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable. UPC § Penalty Clause for Contest. -- A provision in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings. NOTE: If entire will challenged, clause only could be enforced if claimant loses the will contest. If claimant wins, will (including No Contest Clause) is thrown out.

13. Other Provisions No Contest Clauses: Policy Considerations
Enforcing no contest clauses can further the testator’s intent, preserve the resources of the estate, discourage strike suits, and prevent the airing of a family’s dirty laundry. BUT No contest clauses might discourage meritorious lawsuits and are hard to square with the potent public policy in favor of access to the courts.

14. Other Provisions No Contest Clauses: Rain Man Example
Under father’s will:
C gets a car and “outright title to my prizewinning hybrid rose bushes” to remind him of “the possibility of perfection.”
Rest of $3 million estate in trust for to autistic brother.
Would no contest clause deter C from challenging will? Authors believe “the devise of a car and shrubbery” [!!] not sufficiently valuable bait to deter litigation.

15. Other Provisions No Contest Clauses: Estate of Shumway
Ralph Shumway’s June 26, 1997 Will
In Arizona, which follows UPC.
Executed six days before Ralph died.
Leaves1/4 of Ralph’s estate to his “helper and bookkeeper,” Adelida Rodriguez, who had never been the beneficiary of any of Ralph’s previous wills.
Adelida helped him prepare the will with computer software she had purchased. Includes no contest clause.
The witnesses were Adelida’s relatives.
Four days after execution, Ralph was “clearly incompetent.”

16. Other Provisions No Contest Clauses: Estate of Shumway
Will challenged (for Undue Influence) by T’s daughter, who loses will contest at trial.
Under Arizona/UPC, No Contest clause won’t be enforced if “probable cause” for will contest.
Arizona S.Ct. finds probable cause here from substantial evidence of UI. [Good case for you to review facts relevant to UI.]
Note: Program used to draft will did not allow drafter to pick & choose among clauses, so T may not have been aware of. Raises Policy Q re proper treatment of boilerplate clauses (outside our scope)

17. Other Provisions No Contest Clauses: Estate of Shumway
Why did T’s daughter lose will contest given substantial evidence of UI detailed by Ariz. S.Ct? Two facts not in appellate opinion:
(1) Helper/Bookkeeper accused of UI had prepared T’s previous will (which left her nothing); and
(2) This previous will had actually given T’s children even less of a share than the later will that was challenged.
[Again, good case for you to review facts relevant to UI.]

18. Problem 5.5 LAST NAMES A-DI
Based on Seymour v. Biehslich, 266 S.W.3d 722 (Ark. 2007). For problem to make sense, state must (i) recognize Holographic Wills (ii) use UPC probable cause rule for applying No Contest clauses.
T’s children find signed will in safe entirely in T’s distinctive handwriting dated 6/11/15. Will gives $10,000 to child M and $50,000 each to other children and contains no contest clause.
After probate of T’s estate begins, M files a petition to validate (as holographic will) a handwritten document found in glove compartment of T’s car. In neat block letters, this document gives all of T’s property to M. Dated 8/1/15, it ends with an X rather than T’s signature.

19. Problem 5.5 LAST NAMES A-DI
T’s children find signed will in safe entirely in T’s distinctive handwriting dated 6/11/15. Will gives $10,000 to child M and $50,000 each to other children and contains no contest clause.
After probate of T’s estate begins, M files a petition to validate (as holographic will) a handwritten document found in glove compartment of T’s car. In neat block letters, this document gives all of T’s property to M. Dated 8/1/15, it ends with an X rather than T’s signature.
Court rejects 8/1 document and enforces 6/11 document as will. Should court enforce no contest clause against M?
Should M’s petition be classified as “will contest”?
Facts here going to Probable Cause (or lack thereof)?

20. Problem 5.5 LAST NAMES A-DI
Facts going to Probable Cause (or lack thereof)?
T is “estate planning lawyer;” unlikely to do these acts:
2d found in glove compartment (where 1st document in safe in office).
Not in distinctive handwriting.
No signature (and no evidence of disability on 8/1)
Change in disposition favoring M (finder of document) suggests forgery.
[Also M hadn’t sought legal advice.]

21. Other Provisions: Minor Children (Guardians)
Key Points for our purposes laid out in 1st para. of this section of textbook at 226. Need to know generally that, under UPC:
Parent’s signed writing or will appointing guardian presumptively given force by court
Interested parties can object.
Court then decides on guardian based on best interests of child.
R.M.S. is good case to see how this works and to go through UPC provisions, but you aren’t responsible for the details in case or statute.

22. Other Provisions: Just Debts
Most wills contain a “Just* Debts” provision directing the executor to pay off these debts from the assets in the estate.. E.g.,
*Here, “just” means something like “fair or genuine” as opposed to pay “just [the] debts” and not other obligations.

23. “Just Debts” Clauses: BUT… Background: The Exoneration Problem
T owns a house that is subject to a $100,000 mortgage. T’s will leaves the house to Andy and the residue of his estate to Brenda and Carlos. Does Andy take the house and assume the responsibility for paying the mortgage? Or does Andy take the house free of the mortgage, so that the rest of T’s estate must pay off the mortgage (therefore reducing Brenda and Carlos’s shares)?
In most states, the modern default rule is non-exoneration: we assume that T wanted the beneficiary who receives real estate to pay off any mortgage. So we presume that Andy is responsible for the mortgage.
Most wills also instruct the executor to pay T’s “just debts.” A mortgage is a debt, and the executor is supposed to use the residue to pay obligations of the estate. Does a “just debts” clause override the non-exoneration presumption?
BUT…

24. Just Debts & Non-Exoneration
Most wills contain a “Just* Debts” provision directing the executor to pay off these debts from the assets in the estate.
UPC §2-607 Nonexoneration. A specific devise passes subject to any mortgage interest existing at the date of death, without right of exoneration, regardless of a general directive in the will to pay debts.
Thus, under the UPC, a generic “just debts” clause does NOT require the residuary beneficiaries to pay off the remaining mortgage balance on specifically-devised real property.

25. Just Debts & Non-Exoneration: Estate of Vincent
G buys a house and takes out a $150,000 mortgage.
G deeds house to himself and nephew, W, with right of survivorship.
G executes a will that leaves his entire estate to J, and contains the following “just debts” clause:
Does Clause require J to pay
mortgage on house?

26. Just Debts & Non-Exoneration: Estate of Vincent
G buys a house and takes out a $150,000 mortgage. G deeds house to himself and nephew, W, with right of survivorship. G executes a will that leaves his entire estate to J, and contains a“just debts” clause that explicitly includes “installment debts secured by real estate.”
Court notes modern general policy in favor of non-exoneration and rules:
Case for non-exoneration even stronger when land in Q passing outside the probate process.
Specific language in “just debts” clause not strong enough to force beneficiary to pay off W’s mortgage out of estate. Would want to see direct reference to W or property in Q.

27. Just Debts & Non-Exoneration: Problem 5.7
Carmel died, leaving a valid will that gives her house to her daughter, Kristi, and the residue of her estate to her son, Brandon. The house is subject to a $100,000 mortgage. Carmel also owned $200,000 in cash. Under the UPC, does estate have to pat K’s mortgage if …?
Carmel’s will requires her executor to “pay her just debts.” NO. This is precisely the situation in which UPC protects residuary beneficiaries.
Carmel’s will requires her executor to “pay her just debts, other than those relating to real property.” NO. Even stronger case b/c of explicit language.
Carmel’s will requires her executor to “pay her just debts, including those relating to real property.” YES. Specific language probably enough to overcome UPC presumption.
Carmel’s will says nothing about paying her debts. NO. UPC defaults to non- exoneration.

28. Negative Wills: Section 5.6
We briefly discussed in Chapter on Intestacy. You just need to know that someone can execute a document with ordinary will formalities that does nothing except prevent one or more heirs apparent from receiving property through intestacy. The intestate estate is then divided as though these heirs apparent had disclaimed their intestate share.

29. CHAPTER 6: WILL DRAFTING PRINCIPLES & DEFAULT RULES Introduction
UNIT TWO: WILLS
CHAPTER 6: WILL DRAFTING PRINCIPLES
& DEFAULT RULES
Introduction

30. Will Drafting Principles – Introduction
Two themes: 1. Wills are forward-looking instruments, but often fail to anticipate contingencies and changes of circumstance (notably (i) named beneficiaries pre-deceasing the T and (ii) the extent/nature of T’s property changing between execution of will and T’s death). [TODAY] 2. Wills are subject to the limitations of language, including ambiguity and mistake. [TUESDAY]

31. Addressing the Death of a Beneficiary
UNIT TWO: WILLS
CHAPTER 6: WILL DRAFTING PRINCIPLES
& DEFAULT RULES
Addressing the Death of a Beneficiary
6.2 Lapse
6.3 Simultaneous Death
6.4 Anti-Lapse

32. Addressing the Death of a Beneficiary Lapse (Failure to Survive)
Rule of Lapse: A testamentary gift fails when the beneficiary predeceases the testator.
“A donative transfer cannot be made to a person who is deceased, because a decedent lacks juridical personality.” Restmt (3d) of Property (WODT): § 26.1, comment b.
A good estate planner anticipates the possibility every gift may lapse by providing contingent gifts (“gifts over” – See Shapira in Chapter 1).
Default rules (e.g., UPC §2-604 on next slide) govern the disposition of lapsed gifts not otherwise addressed by the will.

33. Addressing the Death of a Beneficiary Lapse (Failure to Survive)
Uniform Probate Code § 2-604: Failure of Testamentary Provision (a) Except as provided in Section [Anti-lapse], a devise, other than a residuary devise, that fails for any reason becomes a part of the residue. (b) Except as provided in Section 2-603, if the residue is devised to two or more persons, the share of a residuary devisee that fails for any reason passes to the other residuary devisee, or to other residuary devisees in proportion to the interest of each in the remaining part of the residue.

34. Addressing the Death of a Beneficiary Lapse: Problem 6
Addressing the Death of a Beneficiary Lapse: Problem 6.1 (Last Names Q-W)
A& B married, no children.
A will: to B if she survives me by more than 10 days, otherwise to my parents.
B will: to A if he survives me by more than 10 days, otherwise to my parents.
A survived B by more than 10 days and then died on the 11th.
Who gets B’s property?
Why problematic?
How avoid problems?

35. Addressing the Death of a Beneficiary Lapse: Carpenter v. Miller
T will left almost everything to husband (H, who pre-deceased her) In event H died first, residue went to four people: H’s three siblings and T’s brother (P). In the event any of H’s siblings pre-decease T, that sibling’s interest lapses & gets divided among other residuary beneficiaries In the event P pre-deceases T, the interest he would have had if he survived T would be split equally among P’s children. All of residuary beneficiaries pre-decease T. T’s intestate heirs are also P’s children.

36. Carpenter v. Miller

37. Addressing the Death of a Beneficiary Lapse: Carpenter v. Miller
In the event any of H’s siblings pre-decease T, that sibling’s interest lapses & gets divided among other residuary beneficiaries. In the event P pre- deceases T, the interest he would have had if he survived T would be split equally among P’s children. All of residuary beneficiaries pre-decease T. T’s intestate heirs are also P’s children.
Descendants of H’s siblings claimed that no specific instructions for all 4 beneficiaries pre-deceasing T & possible T did not use “lapse” intending the technical meaning to take effect. They then would conclude shares of all residuary beneficiaries go to heirs of that beneficiary.

38. Addressing the Death of a Beneficiary Lapse: Problem 6.2
I’ll add slides summarizing redrafting options.

39. Addressing the Death of a Beneficiary Lapse: Problem 6
Addressing the Death of a Beneficiary Lapse: Problem 6.3 (Last Names Q-W)
2004, E executes will naming 5 residuary beneficiaries including L).
2005, L dies. E attends funeral
2008: E executes a codicil in which she reduces the number of residuary beneficiaries from five to four. L although deceased, is one of the four .
2017: E dies.
L’s children claim that naming L in codicil knowing L was dead means intent to pass to L’s Heirs. E’s children, the other 3 residuary beneficiaries, object.
Should the gift to Luella be treated as having lapsed under these circumstances or should the court interpret this devise as “to Luella, but if she predeceases me, to Luella’s estate”? ARGUMENTS?

40. Addressing the Death of a Beneficiary Simultaneous Death
Problem: when individuals who stand to inherit from each other die at the same time or in close temporal proximity. Rule of lapse turns on the order of death, but often difficult to prove who survived whom.
When a beneficiary dies almost immediately after the testator, Common law would have given T’s estate to the beneficiary if proof of the order of death. Modern law generally presumes the beneficiary should not inherit,
Concerns:
Having T’s estate pass through the deceased beneficiary’s estate instead of to T’s own contingent beneficiaries or intestate heirs.
Difficulty of proof.
Gruesome nature of evidence in e.g., car/train accident cases

41. Addressing the Death of a Beneficiary Simultaneous Death
The UPC imposes a default rule that a person must survive the decedent by 120 hours to inherit by intestacy (UPC § 2-104) or will (UPC § 2-702). A donee’s failure to survive the donor by 5 days (120 hours) means that the donee is treated has predeceasing the donor.
By contrast, Fl. Stat. § does not contain a minimum time for survivorship, but only treats the beneficiary as predeceasing the grantor “if there is insufficient evidence that the persons have died otherwise than simultaneously.”
For testate estates, statutes provide a default rule. Ts can override with specific language, usually lengthening survival period (e.g., 30 or 90 days).

42. In Re Leete Estate 803 N.W.2d 889 (Mich. Ct. App. 2010)

43. Addressing the Death of a Beneficiary Simultaneous Death: Leete Estate
H&W married 34 years. No joint descendants; each had descendants from earlier marriage. H’s 1974 will devised a cottage that had been in his family 100+ years to W if she survived him by more than 30 days. 1996, H&W transferred title to the cottage from H’s name to their names as tenants by the entirety. 1998, H leaves car running. W found dead & H unconscious of carbon monoxide poisoning. H dies 4 days later. State law follows UPC.

44. Addressing the Death of a Beneficiary Simultaneous Death: Leete Estate
H’s 1974 will devised cottage to W if she survived him by more than 30 days. She didn’t, so to his heirs? 1996, cottage goes from H’s name to their names as tenants by the entirety. UPC provision says half goes to each. Court says this revokes 1974 provision by inconsistency. H’s heirs claim state exception to 5-day rule where “The application of a 120–hour requirement of survival to multiple governing instruments would result in an unintended failure or duplication of a disposition.” Court says inapplicable; revocation means only one instrument & mutual intent appears to be even split. Example of what exception intended to do in Q6 after case.

45. Problem 6.4

46. Simultaneous Death: Problem 6.4 (Last Names A-DI)
Relevant Statute = If a decedent dies intestate, then:
The decedent's surviving spouse shall be entitled to all of the decedent's property if the decedent has no surviving children;
The decedent's surviving spouse shall be entitled to half of the decedent's property if the decedent has at least one surviving child who is not also a descendant of the surviving spouse. The remaining property shall pass to the decedent's surviving child or children.
If the decedent has no surviving spouse, the decedent's surviving child or children inherit all of the decedent's property.
A. On July 1, Kelly dies. On July 10, Skylar dies. What result?
B. On July 1, Kelly dies. On July 4, Skylar dies. What result?

47. Addressing the Death of a Beneficiary Anti-Lapse Statutes (Vary by State)
Antilapse statutes provide alternative rule of disposition when a beneficiary closely related to the testator predeceases.
Rather than treating such gifts as lapsed, antilapse statutes send the lapsed interest to the predeceased beneficiary’s descendants [not heirs or devisees].
Antilapse applies only when the predeceased beneficiary satisfies the statutorily defined family relationship to the testator.
The purpose is to prevent unintentionally cutting off a branch of the testator’s own family.

48. Antilapse statutes are default rules, so Ts may opt out.
Addressing the Death of a Beneficiary Anti-Lapse Statutes (Vary by State)
Antilapse statutes are default rules, so Ts may opt out.
Example: alternative contingent devise
However, under UPC § 2-603(b)(3) (a minority rule), mere words of survivorship (“To A if A survives me.”) are not sufficient to override the antilapse default. Majority rule is that using this language indicates an opt out.