Part 1: General Trusts & Estates Policies
PART 1: GENERAL TRUSTS & ESTATES POLICIES
Should People be Able to Decide What Happens to Property After Death?
a. YES: Encourage Gratuitous Transfers of Wealth
i. (1) Preserves Legitimacy – Integrity of court to find just results (public wants right to decide)
1. John Locke: Natural Law- right to dispose of one’s estate emanates from natural law- long custom are creates of civil laws
2. Society acknowledges a connection between our lives and property. This may be partly why we give so much respect to the desires of the dead expressed through their wills
ii. (2) Efficiency: Incentive to keep working and accumulate wealth during life
1. Hirsch & Wang- Qualitative Dead Hand: Testators have a natural right to bequeath – can do with wealth what they please
2. Serves the public interest by promoting creation of wealth (jobs to run estate)
iii. (3) Utilitarian: Allowing people freedom of testation encourages them to take care of the elders, those who benefit from the estate to provide services that otherwise would be provided by society
1. Life Cycle Hypothesis (Sherman): Devises are accidental. Risk adversity and uncertainty about one’s own future needs and date of death
b. NO: State Should get Wealth upon Death
i. (1) Wealth Disparity: Accumulation may lead to wealth-based oligarchy (need social advancmnt)
ii. (2) Fairness: Unfair for people who didn’t make the money to inherit it at expense of the public
iii. (3) Don’t Want Dynasty Trusts: Statutes preventing lengthy dead hand control in RAP
1. C/L rule invalidates fut. interests that may vest beyond perpetuities period
a. Nomore than 21 years after death of last identifiable living person at time interest was created (only violating part removed; rest is still valid)
b. Void interest: cut it right out of trust, create a resulting trust back to settlor's estate
2. Some states have adopted the Uniform Statutory RAP (provides 90 year window)
a. Uses a wait-and-see rule, look at real life to see if interest vests within 90-yr period
b. If it has not vested, USRAP allows trust reformation to make an ultimate distribution to the principal of the trust in the way that most closely represents the intent of the settlor
c. Good Practice: In a well drafted trust with serial interests, lawyers will include a Perpetuity Savings Clause for what courts should do with an interest if a court deems an interest to not vest within the time of lives in being plus 21 years.
What is the Lawyer’s Role in Trust and Estate Planning?
a. Lawyer’s role is mostly a planner- to help the client achieve their objectives
b. Lawyer’s role is as a counselor (but only with compete information can you be an effective client counselor) Ask: What facts are important for drafting purposes?
i. MR 1.6: Can’t reveal information relating to the representation of the client unless client consents
ii. MR 1.7: Can’t represent client if it’s a conflict of interest – repping one is directly adverse to other
iii. A fiduciary relationship exists when one has a special confidence in another so that the latter, in equity and good conscience, is bound to act in good faith. (Hotz v. Minyard – car dealership)
1. Holding: Dobson was Judy’s attorney, he had an ongoing fiduciary relationship with her, so he had a duty not to misrepresent the contents of the first will.
2. Good Practice: Sign a letter saying no secrets, and withdraw if you do
d. But screwed if you withdraw, so give them time to fix, or family meeting
iv. Majority: Attorney who drafts document owes intended beneficiaries a duty of reasonable care.
i. Most states don’t have a privity bar and would have allowed grandkids to sue in Barcello
ii. Whether a D owes a duty to the P depends on: Risk, foreseeability, and the likelihood of injury weighed against the social utility of the actor’s conduct, the magnitude of the burden of guarding against injury, and the consequences of placing the burden on D
v. Minority: Attorney preparing estate documents owes a duty only to his client (testator) not to third parties benefited by the estate plan. (Barcello v. Elliott – no will signatures, grandkids screwed)
1. Holding: Because attorney did not represent beneficiaries, he owed no professional duty to them. When a will is declared invalid, questions about what the testator wanted, so can’t hold attorney responsible as it might have been deceased’s’ intent to invalidate will
2. Only 5 states uphold the privity bar found by majority opinion
3. Policy For: Attorneys are the cheapest cost avoider. No privity bar efficiently allocates risk to the person responsible for drafting it – nobody else is in a better position to prevent negligence (cheapest cost avoider)
4. Policy Against: Need to have limits on the AC relationship and liability to suit, don’t encourage frivolous malpractice suits by disgruntled beneficiaries
PART 2: WILLS
DID THE PERSON DIE WITH A WILL?
YES, THERE WAS A WILL
a. UPC §2-502(a): Wills must be (1) in writing, (2) signed by testator or someone else with the testator’s presence and direction, (3) either by two other individuals after testator (or acknowledged by a notary)
i. (b) Anything else is valid as a holographic will whether or not witnessed/ signed
ii. (c) Intent that a document be a will can be established by extrinsic evidence
iii. A will is an ambulatory instrument, it has no legal effect until the testator’s death, irrevocable then
iv. UPC §2-506: COL: Valid if executed in compliance with 2-205 or 2-503 or if it complies with the law (1) at time and place where executed, or (2) testator’s domicile at time of execution or death
b. (1) Legal Capacity: UPC § 2-501 —an individual at least 18 y.o. to make a will.
c. (2) Testamentary Capacity & Intent: UPC § 2-501—testator must be of “sound mind”
i. UPC §2-503: Person executing will has to be “of sound mind” (legal, not medical standard)
ii. Testator is able to: (1) know the nature of the business they’re conducting (making a will), (2) recollect the property to dispose of (the natural objects of their bounty), (3) scope of their property, and (4) put them together in a coherent plan: At the time the will is EXECUTED or REVOKED
d. (3) Compliance with statutory formalities: Policy Functions served by Statute of Wills Formalities
i. (1) Protective (make it be in the presence of certain trusted people, witness decrease criminals, reduces fraud or undue influence),
ii. (2) Ritual (formality, ensure careful reflection)
iii. (3) Evidentiary (hard copy is more legitimate, creates a record for probate if challenged),
iv. (4) Channeling (promotes uniformity, easier access to the courts to know what kind of document it is, what’s required to go through probate, efficient)
v. Statute of Frauds: No action brought on any agreement not performed within a space of 1 year unless the agreement is in writing, signed by the party to be charged
vi. Same requirements for wills to be in writing – tried to codify common practices among estate planners (person in a K is still alive and can explain, but in a will, they’re not around anymore)
WHAT KIND OF WILL WAS IT?
1. Nuncupative Wills: Declared orally as opposed to in writing – allowed in very specific circumstances
a. Common when people weren’t literate – speak will aloud before witnesses/court
b. Few states recognize and they limit amount that can be transferred (usually soldiers, sea)
2. Notarial Wills: Written will, signed by testator and attested to by a public notary
a. As seen in UPC § 2-502(a)(3)(b): common in Europe partly because public notaries have a better legal status than in the US
3. A Holographic Will: Handwritten doc has less chance of forgery, enhanced assurance of authenticity
a. But sometimes creates problems –litigation, fraud, discovery of holographic wills after probate
b. Historical part of rural life where a dying T may not be able to find two disinterested witnesses
c. Type 1: Written, Signed and Dated: (9 states retain this rule for holographic will)
i. Absolutely everything has to be in the testator’s handwriting
d. Type 2: UPC “Material Provisions”: (7 have adopted this 1969 UPC approach)
i. UPC §2-502(b): A will not complying with §2-502(a) is valid as a holographic will, whether or not witnessed, if signature and material portions of doc are in testator's handwriting
ii. Important provisions have to be in testator’s handwriting including dispositive language (“I leave my residue to __”) and indication of testator’s intent
iii. But then issue because material provisions were not handwritten with form wills
e. Type 3: “Material Portions”: Some statutes require the entire holographic document be in testator’s handwriting, dated and signed (material provisions in testator’s handwriting), issue with form wills
i. UPC 1990 version designed to validate a holographic will that has typed boilerplate form
ii. Court considers extrinsic evidence to determine whether document has testamentary intent
iii. Can look at type portion to show testamentary intent, and look at meaning of handwritten language in light of the form provisions
f. A document is a codicil instead of a will if it amends a portion of the estate not the whole thing – holographic if it doesn’t have every necessary element to be valid. (Estate of Charles Kuralt)
i. Holding: Sufficient evidence to find that the June 1997 letter expressed Kuralt’s intent to effect a posthumous transfer of his Montana property
1. “Dear Pat” letter a holographic codicil, not will because only devised part of estate
g. Courts split on whether holographic will may incorporate by reference something typed. (Easter Sunday Will) Fraud? No channeling function, more evidentiary function having handwriting on the same page as the typed doc – prevents someone from typing something up and stapling it together
4. Formal Attested Will: Most common kind (95% of wills). Requires:
a. (1) IN WRITING: Unlikely that audio, video, or digital will would satisfy writing requirement
1. But see: Nevada says digital wills can be valid, but proponent must prove by clear and convincing evidence that the digital file is the only file of the will that exists
b. (2) SIGNED BY TESTATOR
i. Any mark representing their consent or by proxy if proxy signs at testator’s request and in their presence (focus on intent: what is closest thing to honoring the decedent’s intentions?)
ii. Taylor v. Holt: Can even have a computer generated signature
1. UPC eliminated “at the end” requirement of signing wills
iii. Publication – act of letting witnesses know that it’s a will that the testator signed
1. Usually orally – “this is my will and I want you to sign it as witnesses” but some states require you to publish your intention and the witnesses (required in NY)
iv. Starting in 19th century, courts required signature to be at will's end (UPC doesn’t)
c. (3) SIGNED BY WITNESSES/ATTESTED
i. Most require that wills be attested- witnessed by a minimum number of competent witnesses
1. Requires witnesses to sign in the presence of testator – not “conscious presence” to be down the hall (Morris v. West) – strict interpretation of rules, found invalid for probate
2. CL: An interested witness was struck from will (might make the will fail entirely)
3. Modern Majority: Void the gift to the interested witness but save the will and still allow the witness to serve as a witness.
ii. Good Candidate: Witnesses who can be found easily, won’t die first, and who can testify at the testator’s death, reputable in the community and who won’t inherit from intestate statute
iii. Attestation Clause: Boilerplate stating the will formalities have been satisfied (witnesses sign)
1. Makes witnesses be more aware of what they’re signing – then are bound to it
2. Not required by states, but creates a presumption that it’s valid in court
iv. Timing: Under UPC §2-502: ok if post-death signature is still within “reasonable time”
d. (“4”) – EXECUTION CEREMONY (not part of strict requirements)
1. Minimum Requirements: (1) will in final form (numbered, bound) with attestation clauses and self-proving affidavit if authorized, (2) two witnesses present, or three if risk of contest (drafter can be a witness) – law enforcement personnel good witnesses
2. One room with drafter and the client (review pages, introduce witnesses)
3. Sign only one document (ask “is this your will? Do you want it to be executed, etc.?”)
4. As testator to read the “testimonium clause” out loud (makes you see how competent they are), then count the number of pages, initial each one, then testator signs
WHAT WAS INCLUDED IN THE WILL?
1. Integration Doctrine: Allows you to integrate multiple pages as a part of one single will
a. All pieces of paper which are present at the execution and which the testator intended to be part of the will are a part of the will (stapler) – testator should sign or initial each page of their will
2. Incorporation by Reference: Will which disposes of property in accordance with an uncontested document will be considered valid if: (1) The writing was in existence when a will is executed, (2) the language of the will manifests this intent to incorporate the document, and (3) it describes the writing in sufficient detail to identify it (UPC §2-510) (for all kinds of property)
a. For personal property: Can look at separate doc as long as the writing is (1) signed by testator and (2) described items and devisee with reasonable certainty (UPC §2-513, modern but minority)
i. Allows tangibles to be executed after the execution of the will, can change it after too
b. Incorporation by Reference can apply to incorporate language or instruments that have never been validly executed OR prior validly executed wills (like her diary /memo in Clark v. Greenhagle)
3. Republication by Codicil: A properly executed will may incorporate by reference into its provisions any document not so executed and witnessed whether the paper refereed to is a list or memorandum if: (1) it was in existence at the time will was executed, (2) and it is identified by clear and satisfactory proof