cdn.ymaws.com · Web viewIf no executor specified, you have Admin CTS (with will attached)....

A Sketch of the Law Behind Wills & Estates

Wills & Estates, Fall 2012, BYU Law, Prof. Robert (Rust) S. Tippett

ContentsI. DISPOSITION OF PROPERTY ON DEATH...............................................5

A. Joint Tenancy.......................................................................................5B. Beneficiary Designation.......................................................................5C. Revocable Trust...................................................................................5D. Will.......................................................................................................5E. Intestacy..............................................................................................6F. Personal Representatives.......................................................................6

II. Probate......................................................................................................6A. Procedure............................................................................................6B. Avoiding Probate.................................................................................7

III. Trusts......................................................................................................7IV. Assorted Vocabulary...............................................................................8V. Power of Spouse to Dispose of Property...................................................9VI. Attorney Representation Issues...........................................................10

A. Conflict..............................................................................................10B. Multiple Representation....................................................................10C. Attorney for Fiduciary.......................................................................10D. Attorney for Testator.........................................................................10E. Questions Always to Ask....................................................................10

VII. Incapacity.............................................................................................10VIII. Powers of Appointment.....................................................................11IX. Taxes.....................................................................................................11

A. Estate Tax..........................................................................................111. Deductions.........................................................................................11

B. Gift Tax..............................................................................................121. Non-taxable.......................................................................................12

C. Tax Returns.......................................................................................12

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X. Some Examples and Charts....................................................................12XI. Distribution Methods............................................................................14

A. Per Stirpes (slurpees) aka Right of Representation..........................14B. Equal Share Method..........................................................................14C. Per Capita at Each Generation..........................................................14D. Pure Per Capita.................................................................................14E. Disinheritance...................................................................................14

XII. Intestacy...............................................................................................14A. Property Subject to Intestacy............................................................15

1. Utah...................................................................................................152. California...........................................................................................15

B. Surviving Spouse’s Share..................................................................15C. Everyone Else....................................................................................16D. HOTCHPOT.......................................................................................17E. Sample Problems...............................................................................17F. Familial Relationships..........................................................................17G. Wrongful Death Statutes...................................................................18H. Simultaneous Death or Death Between Decedent’s Death and Distribution................................................................................................18

XIII. Life Time Advances............................................................................19XIV. Validity of Wills..................................................................................19

A. Testamentary Capacity......................................................................191. Testamentary Capacity per Common Law........................................192. California Approach...........................................................................203. Evidence and Preplanning Considerations........................................20

B. Undue Influence................................................................................201. Burden of Proof Shift.........................................................................202. Evidence and Steps to Take to Prevent.............................................213. California...........................................................................................214. Professional Responsibility................................................................22

XV. Contesting a Will..................................................................................22

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A. No Contest Clause (NCC)..................................................................22B. Enforceability of NCCs......................................................................22

XVI. Formalities of Execution....................................................................23A. Wills Must Have Two Witnesses........................................................23

1. Self-Proving Will................................................................................24B. Holographic Will................................................................................24C. Codicil................................................................................................24D. Substantial Compliance.....................................................................24E. Signing Will in One State, Dying in Another.....................................24F. Incorporation by Reference..................................................................24G. Acts of Independent Significance......................................................24H. Contract to Make a Will.....................................................................25

XVII. Revocation of Wills............................................................................25A. Dependent Relative Revocation (Rare Common Law).......................25

XVIII. Will Revival........................................................................................25XIX. Codicil Has Effect of Republishing Will.............................................27XX. Extrinsic Evidence................................................................................28

A. Policy.................................................................................................281. When Should Extrinsic Evidence Be Let In?.....................................282. When Should Extrinsic Evidence Be Excluded?................................28

B. The Common Law Answer:................................................................291. Problems with PMR...........................................................................29

C. California...........................................................................................29D. Utah...................................................................................................29

XXI. Rules of Construction........................................................................29A. Types of Bequests..............................................................................29B. Suppose the Specific Gift/Property is Not in the Estate...................30

1. Calif 21133-21134:............................................................................302. Utah 2-606.........................................................................................30

C. Transformation of Specific Property.................................................30D. Exoneration of Mortgage...................................................................31

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E. Abatement of Pecuniary Gifts............................................................31F. Ademption of Pecuniary Gifts by Satisfaction......................................31G. Demonstrative Bequests (this isn't super well developed or consistent across the states)......................................................................31H. Residuary Bequests...........................................................................31I. Beneficiary Predeceases Testator........................................................31J. Anti-Lapse Statutes..............................................................................32

1. Utah's Anti-Lapse..............................................................................322. California Antilapse...........................................................................32

K. Situations...........................................................................................33XXII. Omitted Spouse or Child...................................................................33

A. Spouse...............................................................................................331. Cal 21610-21612...............................................................................332. Utah—2-301.......................................................................................34

B. Child..................................................................................................341. Cal 21620-21623...............................................................................342. Utah 2-302.........................................................................................34

XXIII. Divorce...............................................................................................35A. California...........................................................................................35B. Utah 2-804.........................................................................................35

XXIV. Homicide............................................................................................35A. Cal 250...............................................................................................35B. Utah 2-803.........................................................................................35

XXV. Disclaimers........................................................................................35XXVI. Surviving Spouse’s Elective Share....................................................35XXVII. Family Protection............................................................................36XXVIII. California Probate...........................................................................36

A. Petition for Probate...........................................................................36B. Preliminary Management Responsibilities........................................37C. On-Going Management Responsibilities...........................................37D. What if a Revocable Trust?................................................................37

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E. Independent Administration of Estates Act.......................................37XXIX. Utah Probate......................................................................................38XXX. Distribution........................................................................................38XXXI. Ancillary Probate...............................................................................38XXXII. Special Administration...................................................................38XXXIII. Guardian Ad Litem..........................................................................39XXXIV. Fiduciary Duties.............................................................................39XXXV. Estate Tax.......................................................................................39XXXVI. Gift Tax...........................................................................................40

A. Annual Exclusion Gifting...................................................................40B. 2012 Opportunity..............................................................................40

XXXVII. Fractional Interest Discounts......................................................40XXXVIII. Generation Skipping Transfer Tax (GST)....................................40XXXIX. Credit Shelter Trusts aka By-Pass Trusts.......................................41

A. Q-TIP Marital Trust...........................................................................41XL. Life Insurance Trust.............................................................................41

I. DISPOSITION OF PROPERTY ON DEATHUpon death, use the following questions in order to determine where things are to go.

A. Joint TenancyWas the property held in joint tenancy? If so, there is a right of survivorship. The surviving joint tenant automatically owns the property. If that is the case, there are no more questions. This can be bank accounts, brokerage and mutual fund accounts, and real estate. To claim, the survivor files a death certificate. NO PROBATE

B. Beneficiary DesignationIf there is a designation, the property passes to that person. These can be found on retirement plans, in life insurance policies, bank account, brokerage account. These are called payable on death accounts (POD). NO PROBATE

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C. Revocable TrustWas the asset held in a revocable trust? If so, the trust controls. If not held in revocable trust, you look toward the will. Textbook: This isn't a testamentary trust--this is an inter vivos trust. NO PROBATE

D. WillIf there is a will, then you follow the will. PROBATE There is probate even if it is a pour over will to the revocable trust. A will is made by a testator/testatrix. The assets are the estate. Personal representative is the fiduciary for the estate, aka the executor. If no executor specified, you have Admin CTS (with will attached). Executor marshals assets, takes possession, makes inventory, pays creditors, provides info to beneficiaries, makes accountings, cares for property, files tax returns. The devisees are the beneficiaries.

E. IntestacyIf no will, then that means the individual had died intestate. Basically, the rules of the probate code will decree how the property is to be distributed. PROBATE. Intestacy governs anything not covered by a will or beneficiary designation. The personal representative is an Administrator, appointed by court after petition, due notice, etc. Beneficiaries are heirs, not devisees and vice versa. Intestacy occurs when there is no will or estate planning, where there is partial intestacy—aka no residuary clause, or where the will gets thrown out

F. Personal Representatives Inventory the estate Give notice to beneficiaries (UPC) Give notice to creditors (UPC) Pay taxes Make accountings: trustee should give accounting to

beneficiaries on at least a yearly basis. This applies to trusts, too. Start with beginning balance, list income, list disbursements/expenses, and list distributions to beneficiaries, then list the ending balance.

Sell/Liquidate Assets Distribute to beneficiaries

II. ProbatePurpose of probate is to get property in right hands, with clean title, and protect creditors. Property with joint tenancy or beneficiary

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designation or held in revocable trust doesn’t need probate. You can record the probate order with the recorder just like a deed. An exception is universal succession, popular in Louisiana.

A. Procedure Opening probate: Personal representative gets letters of

testamentary or letters of administration. If things are contentious, things get more formal.

Formal v. Informalo Formal: Everything litigated with final judgment and

trips to the courthouse.o Informal: Representative does nothing in the court

after getting appointed and ultimately swears that the estate was taken care of. Rubberstamping galore, until somebody starts making objections.

Barring creditors: Some non-claim statutes bar creditors within time after probate starts or within years of death. Known creditors have more rights.

Closing the estate: The court grants discharge to relieve personal rep of liability.

B. Avoiding Probate Probate is length, about a year. It can be inconvenient

with multiple trips to the courthouse. It can be expensive with filing fees and help of a lawyer. It gets nasty if you have to do ancillary probate on property outside of a state. This is especially true in California. Probate is also public—everybody can see everything that passes. Utah is more streamlined because of the UPC, but a contender can cause issues.

Methods to avoid probate:o Joint tenancy: Works, but can’t pass that to heirs,

and creditors will be incentivized to come after you earlier. It also surrenders control of property.

o Beneficiary designationso Estate less than or equal to $100k in California, as

long as no real estate involved. To get property, you walk into bank with affidavit.

o Revocable trusts

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III. TrustsCreated by a settlor, trustor, grantor, administrated by a trustee/fiduciary, benefits beneficiaries, governed by a trust instrument. Always remember who the fiduciary is and what document governs. If you’re doing business with a trust, you need to make sure there is authority. Probate code governs in silence. The fiduciaries are the ones who hold legal title of trust property.

Why Create?

When Create?

Funding Trustee Beneficial Interests

Termination

Revocable (Declares who gets what when you die--a will substitute--the dispositive provisions of your estate.)

Avoid probate.Avoid conservatorship.DOES NOT avoid income tax. The trust is merely your alter ego. The government does not really see any difference between you and your revocable trust. It does not avoid estate tax--not anymore than a will, anyway. Does not provide asset protection.

Lifetime Real Estate, Bank Accounts, Brokerage Accounts, Partnership Interests, General Assignment (used to dump everything into the revocable trust), but not Retirement Plans. With general assignment, you want to transfer land to the trust before the will

Settlor Settlor (as long as the settlor is alive.) Then after he dies, other beneficiaries

Death

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because it will be bad trying to transfer title to trust later.

Irrevocable

It cannot be revoked by the settlor. Perhaps you are making a gift to somebody, but when you do not want them to receive that gift all at once. There are also tax reasons. There are asset protection reasons. Settlor should not be trustee or beneficiary.

Can create during life or upon your death. Inter Vivos or Testamentary

SAME, but no general assignment.

Corporate or Individual serving as trustee. Corporate is expensive, but individuals can be idiots.

Beneficiaries

Whenever the terms of the trust dictate. Some are perpetual/dynasty trusts.

IV. Assorted Vocabulary Codicil: Amendment to a will Community Property with Right of Survivorship CPWRS:

Community property passes to surviving spouse Principal: lump sum you begin with, the trust estate or the

corpus res Income: Dividends generated from stocks and bonds Income Beneficiary: Guy who gets paid money from trust

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Remainder Beneficiary: Guy who gets trust after a death Trustee gets about 1% of trust’s assets each year. Mandatory distribution: Trustee must pay out Discretionary distribution: Trustee can pay if he feels like it Pour over will: Stuff held in testator’s name goes through

probate and then to revocable trust. A will with one basic provision.

V. Power of Spouse to Dispose of PropertyWhich spouse has power to dispose of what property? A deceased spouse can dispose of one half of community property and all of their own property. If it is a common law state, you look to title.

Community Property State (like California)

Separate Property: Anything the spouse brought to the marriage. Anything the spouse receives as gift or inheritance during the marriage. Income and appreciation on separate property is also separate property.

Community Property: Anything that is earned by either spouse during the marriage. Also income or appreciation on community property is community property.

On Divorce, each spouse keeps all SP, but they split CP 50/50.On Death: Surviving spouse keeps SP, keeps 1/2 CP. The decedent has right to dispose of SP and 1/2 of CP. Look to Will, Revocable Trust, Intestacy.

Common Law State, like Utah:

Separate Property: Same as a community property state.

Marital Property: Same as a community property state. Distinction not relevant on death. You look to title. This is only relevant on divorce.

On Death, follow title. If everything is in husband's name and he dies, he can dispose of that property. Suppose you have Bob & Mary. If joint tenants, then survivor gets it. If deed says "Bob and Mary," then presumption is in common. If marriage mentioned on

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deed, then right of survivorship assumed. On Divorce, there is separate property and then with marital property equitable distribution.

Also check for states that have enacted UDCPRDA. If state has this, look to community property that vested while the couple was in another state. Utah has adopted this, so basically community property is honored. Also note that California has registered domestic partners.

VI. Attorney Representation Issues

A. ConflictAn actual conflict is where it is impossible to effectively represent both clients. AKA, they’re suing each other. A potential conflict is where you can still effectively represent them both, but still need to get a waiver.

B. Multiple RepresentationWhen you represent two people on the same matter, you can have joint representation where there is no confidentiality between people or separate representation where you do have a duty of confidentiality.

C. Attorney for FiduciaryYou do not represent the beneficiaries. You can't be telling the beneficiaries without figuring out what fiduciary wants to reveal. Mere fact that you represent fiduciary does not mean you represent beneficiary. Representing both the fiduciary and the beneficiary can be potential conflict, but not necessarily actual conflict. It could be possible for the fiduciary to need 2 lawyers if he wants to have a conflict as beneficiary with the trust. Or perhaps if your fiduciary gets sued as a bad person, there should be another attorney. It is possible to represent both fiduciary and beneficiary, but you would have to get a waiver in writing because it is a potential conflict.

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D. Attorney for TestatorDuty owed to beneficiaries and liability can be incurred.

E. Questions Always to AskWho do you represent? In what capacity? To whom do you owe a duty of care and a duty of confidentiality?

VII. Incapacity1. Revocable Trust will facilitate things when you become

incapacitated. This avoid a conservatorship the same way you avoid a probate. If all your assets are in the revocable trust when you become incapacitated, and there is a successor trustee, then things move right on down the road. No court management, at least for your property.

2. Power of Attorney: It kind of can work as well as a revocable trust. Any owned assets are subject to power of attorney. Banks and financial institutions are not impressed, though. Does not avoid probate. Typically, you should have both power of attorney and revocable trust so that the assets you didn't put in the trust can be placed there before you die.

3. Conservatorship--lifetime probate: You want to avoid this. This can lead to civil rights issues. Before a conservatorship can be put in place, a physician has to sign on the dotted line. The court might send out a court investigator to interview the prospective conservatee. The court might appoint a PVP attorney. Probate Volunteer Panel attorney. This attorney will make sure that the conservatee's legal rights are being protected.

VIII. Powers of AppointmentThe reason for this is to build flexibility into an estate plan. You don't know what happening when you are creating an irrevocable trust. Grandma creates an irrevocable trust and makes Daughter the income beneficiary. The trust says that when daughter dies, the children will inherit the three shares of the principal. But then, Grandma wonders what will happen with her grandchildren. So then she gives daughter-beneficiary a power of appointment which gives daughter the power to rearrange the terms of the trust, even cutting out or whatever.

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Power of appointment could be super broad or particularly narrow, liberal or restrictive based on what grandma wanted. Power of appointment holder has no fiduciary duties. Grandma = creator of power of appointment, or donorHolder = Daughter = ability to exercise power of appointment, or doneeTakers in Default = the grandchildren in equal shares where the power of appointment has not been exercised.If power of appointment is exercised, then you get the permissible appointees. General (if any of the following are permissible appointees, then the power of appointment is general) (not good):

1. Holder2. Holder's creditors3. Holder's estate4. Creditors of his estate.

It is Limited for all else. (Limited is good).If it is a general power of appointment, the assets of the trust are merged in with the daughter's estate, subject to taxes, etc.

IX. Taxes

A. Estate TaxEverything you own is taxed. If you can take it to Wendover, it is taxed. This includes revocable trusts, beneficiary designations, joint tenancy, etc. If you have general power of appointment, that is taxed as well. Lifetime gifts are not taxed as part of estate. You are not taxed on stuff for which you are trustee. You are not taxed for limited power of appointment.

1. DeductionsYou get an unlimited deduction for property left to spouse. You get $5 million exemption until 2013, then $1 million on charity.

B. Gift TaxEvery gift is taxable except those noted below. You file Form 709 yearly and that keeps track of gifts you have made and then those gifts deduct against your estate tax deduction. If your client is rich, help them get money out of there estate. If you want to make the gift but actually lock it

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up in a trust, you have to issue a Crummey Letter noting a small amount of time that the gift is available to the done before it gets locked. Also, with a 529 plan, you can front-load the gift limit for five years and forego giving gifts until the 5-years is up.

1. Non-taxable $13k per done per year Somebody’s medical bills Education expenses for somebody—if provider

paid directly Spouse and charity

C. Tax Returns Estate Tax Returns: Form 706. Only filed if estate is

more than 5 million/1million Decedent’s final income—Form 1040 Fiduciary Income Tax Return—Form 1041: An estate

is a separate tax-paying entity. Further, 1041 applies to irrevocable trusts filed by fiduciary.

Form 709 is taxable gift return report

X. Some Examples and Charts

Person Age 50 Age 70 AKA dies Result

Ann Revocable trust & pour over will. The revocable trust creates an irrevocable, testamentary trust for her daughter.

Dies, trust was fully funded

No probate. When she dies, whoever is successor trustee steps in and begins managing those assets according to the terms of the trust.

Beth Same House is not in her revocable trust.

No probate for anything except the house which is probated hard core. Because there is a pour over will, after probate, the house goes into the revocable trust.

Carol Same, but not pour over will

House not in revocable trust.

House has to go through probate. If no will, then it will have to go to Carol's intestate heirs.

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Denise Same but retirement plan to sister.

That's where the retirement plan goes because of the beneficiary designation on the plan.

Elaine No estate planning

Dies Everything through probate, intestate heirs

Fran Will--outright to Neighbor

Dies Everything Fran has must go through probate and then goes to her neighbor.

Georgette Will creates testamentary trust for her nephew.

Dies Everything through probate and then the trust for nephew is created.

Helen Will House to Niece, no residuary clause

Dies Probate . . . Niece gets house. Intestate heirs get the residuary.

Isabel Revocable Trust & Pour Over Will into a testamentary trust for her husband.

No probate if it was fully funded. The successor trustee creates a testamentary trust for husband that leaves everything.

Julie Will--all to husband outright

There will be probate, and then everything to her husband.

Entity Creator Fiduciary (holds legal title to the property, except maybe for power of attorney?) This is the person who has to sign off when you're doing a deal.

Beneficial Interest

Estate Testator/Decedent Personal Representative

Devisees (for will), or heirs for an intestate situation.

Revocable Trust

Settlor Trustee, usually the settlor if he/she is alive/competent

Settlor holds beneficiary interest as long as the trust is revocable.

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Irrevocable Trust

Settlor Trustee Somebody not the settlor--beneficiaries.

Conservatorship

Conservatee at least so far as it was his/her assets, but it could be the court because the court forces it.

Conservator Conservatee

Agency (Power of Attorney)

Principal Agent Principal

UTMA Custodianship (Uniform Transference to Minors Act)

Donor Custodian Child (and then gets it all at age of majority.)

Always remember who you represent. There is also a difference between attorney of fiduciary and attorney for person who is fiduciary and is getting sued bad.

XI. Distribution MethodsIt is wise to use diagrams when you have lots of beneficiaries and the will/intestacy statute merely states a distribution method. If the will gives specific amounts to specific people, then you aren’t really going to be using a distribution method.

A. Per Stirpes (slurpees) aka Right of RepresentationEach child gets a share and their descendants can split that share if the child is a dead person. If the child is living, the child’s children get nothing. This is the common law. This method is to be used if the will or trust directs it. Utah 75.2.709. California Probate 246.

B. Equal Share MethodThis equalizes shares among grandchildren if all children are dead. Otherwise, it is per stirpes so long as a child is alive. This is the default method of California for both intestacy and vague wills. Cal Probate 240/245.

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C. Per Capita at Each GenerationPerson gets their fair share among the living of each generation. A single living child of 3 gets 1/3, then they split up according to how many living grandchildren (except for grandchildren of the child who inherited). This is the default of Utah, 75.2.103, 106. It is to be used in intestacy and silent wills. 75.2.208 and if the governing instrument declares. 75.2.209, 247.

D. Pure Per CapitaRare. Each head gets a share.

E. DisinheritanceMust devise away entire estate. You can make a negative will.

XII. IntestacyThis happens when there is no revocable trust, no joint tenancy, no beneficiary designation, and no will as applying to each and every item of the estate. Partial intestacy is possible, particularly with a lack of a residual clause in the will or failure to have a pour over will. Or, if the will becomes invalidated through testamentary incapacity, undue influence, or not being signed properly.

Figure out what property is subject to intestacy. Then, figure out what surviving spouse gets. Then figure out what everyone else gets.

A. Property Subject to Intestacy

1. UtahIf person has title, it is subject to estate.

Bob & Mary on deed = tenants in common, 50% Bob & Mary, joint tenants= right of survivorship

to other spouse Bob & Mary, husband & wife = joint tenancy

assumed

2. California½ of community property and all of separate property

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B. Surviving Spouse’s Share

Utah California (don't worry about non-probate transfer adjustments)

2-102

Also make adjustments for non-probate transfers to anybody who receives anything intestate. May as well go to spouse first, then figure it out the other way. Also, Utah recognizes common law marriage.

6401(a): Surviving spouse walks with all of the community property. Also note that a registered domestic partner counts as spouse.

All if no kids or if all dead spouse's kids are SS's kids.

6401(c): For the separate property, intestate, the surviving spouse might receive:

1. All property: Decedent has no kids, parents, no issue of parents

2. 1/2 of property: 1 child or issue of 1 child only, parent or issue of parent.

3. 1/3 of property: More than one kid, issue of more than one kid

Kids not SS's children? Then surviving spouse gets is $75k plus 1/2 of the balance. But, you have to make an adjustment for non-probate transfers. (But apparently no adjustment for probated transfers (for stuff in a will) Use the HOTCHPOT method. This applies only where there are children that are not the SS's children and there is a non-probate transfer.

C. Everyone Else

Utah 2-103 California 6402/6402.5

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The balance of estate goes to issue of the decedent. Follow the per capita distribution rule regarding capita.If no issue, then goes to parents.If no parents, goes to issue of parents, per capita and each generation. (It's obnoxious to talk about descendants of two peopleIf no issue of parents, then issue of grandparents. (half and half maternal and paternal side).Then to issue of pre-deceased spouse.If nothing, then escheats to the state.Half blood siblings are treated same as full blood siblings.

Under 6402, non-spouse property goes to the issue of the decedent as per the equal share method which is default in California. If no issue, take a detour in 6402.5.This asks whether there was a pre-deceased spouse. Did decadent receive any property from this pre-deceased spouse? If yes--if real estate received within the last 15 years, then that property goes to relatives of the predeceased spouse. If personal property within last 5 years, then that goes to relatives of pre-deceased spouse. It goes first to issue, then parents, then issue of parents, etc. You can follow the profits of real estate sales made by the deceased.Anyway--no issue? Then parents as per equal share method. Then issue of parents as per equal share method. Then issue of grandparents (equal share method). Then issue of a pre-deceased spouse, assuming it wasn't disposed of according to 6402.5. Then you look for next-of-kin of the decedent. What is this? Nobody knows.Perhaps great-grandparents, or just way out there. They're probably saying to look at the chart thingy.6402.f provides for next of kin, and then distributed between next of kin of equal degree. But where there are different ancestors of those, then the closest ancestor is preferred. (Lowest degree of consanguinity, then nearest ancestor) Then to parents of pre-deceased spouse, issue of parents of pre-deceased spouseThen finally, escheat to state.

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D. HOTCHPOTThrow everything that is passing, including non-probate transfers (except perhaps for probate transfers) into the pot. Then figure out the division. And then out of the probate transfers, the person who got non-probate transfer only get so much as to equal their share.

E. Sample ProblemsSample Problems from Book:If H and W are married and H dies leaving W and brother B, then in Utah, W gets all and in California, W gets all community property, 1/2 separate property, and B gets 1/2 separate property. Decedent survived by mother, sister, and two nephews from a deceased brother. In Utah, parent gets all. In California, parent gets all. Decedent survived by a 1st cousin on mother's side and 2 1st cousins on fathers side.In Utah, once you hit grandparents, you split half and half between maternal and paternal, so 1 cousin gets half, other two cousins get 1/4 each. In California, that is 1/3 to each. Decedent survived by mother's 1st cousin and 1st cousin's grandchild. Mother's cousin is fewer degrees of consanguinity, but grandchild of cousin is front a closer line. Decedent survived by B, a sibling, and A, a half-sibling. Both siblings get 1/2.

F. Familial Relationships Half-blood siblings are treated the same as full blood

siblings. Utah 2-107, Cal 6406 For this course: Typical infant adoptions sever

biological relationship and establishes family relationship with adoptive parents. Adoption by step-parent establishes new relationship without severing old relationship. You can inherit form and through in these situations.

Step relationships-generally not genuine. Your stepfather not a relative—no intestate distribution from him or to him. Exception is California 6454 that

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allows that if relationship began while kid was kid and there would have been adoption but for barrier, then it is treated as legit.

Foster kids: ditto Posthumous births—allowed under Utah 2-104 and

Cal 6407 Co-Habiting (in Utah, common law marriage; in Cal, a

registered partnership, In-Laws: Nada, unless statute commands

G. Wrongful Death StatutesThese statutes override intestacy. Usually, an heir refers to someone inheriting via intestacy, but wrongful death statutes have different definitions for heirs.

H. Simultaneous Death or Death Between Decedent’s Death and Distribution

Utah 2-104 and Cal 6403

If they die within 120 hours of each other, they are deemed to have pre-deceased the other. Once past distribution, however, it’s good. If they die before distribution, but after decedent, then their estate inherits.

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XIII. Life Time AdvancesDo you make adjustments for lifetime gifts?2-109 UT There is no adjustment unless there is something in writing saying that you should.and 6409 CALIFSaying the same.The common law said that you should make adjustments.

Adjustment (If treated as advance)

No Adjustment (If not treated as advance)

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Common Law (there was a common law presumption that there should be an adjustment because gifts were considered advances. This could be rebutted with writing from testator saying not to treat as advancement.)

2-1096409It is presumed that an advancement is not requiring of an adjustment. This may be rebutted if giver or receiver puts something in writing saying that it is an advance and should be treated as such.

Hotchpot is used to carry out the adjustment. For example, if Guy dies, leaving 900k and two kids, but having given 100k to one of them, there is a hotchpot of $1 million. Each child is entitled to $500k, but one already has $100k, so only get $400k out of the $900k. If the gift exceeds what is left over, or what the proper share would have been, A merely collects or loses nothing.

Hotchpot used if necessary.

But in any instance, under the statute, if the guy leaves $900k, regardless of lifetime gifts, each of two children gets $450k.

XIV. Validity of WillsWills can be tossed for lack of testamentary capacity, undue influence, and for improper formalities of execution (lack of two witnesses, etc.). To enforce these requirements, somebody might bring a contest to the will.

Burden of Proof: For execution, preponderance of evidence in face of a prima facie case put forth by estate. For testamentary capacity/undue influence, the burden is generally on the contestant for a preponderance of evidence.

This applies to both wills and revocable trusts.

A. Testamentary CapacityGenerally, you must be 19 to make a will. Cal 6100a. Mere fact of illness or other problems does not block capacity. Capacity is its own thing.

1. Testamentary Capacity per Common LawThis applies in Utah and only at the time the will was signed and made:

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Do they know who the natural objects of their bounty are? AKA—do they know who their relative are?

Do they know what property they own? Do they understand the nature of the

testamentary act? Insane delusions—belief without basis for

reason that holder cannot be persuaded otherwise—negates capacity.

2. California ApproachFound in Cal Probate 810-812. This is regarding DPCDA. Criteria in 811.b. You don’t follow a diagnosis, you have to look at the mental functions listed and they must impair individual’s ability to understand. Then, 6100.5 codifies the common law principles.

3. Evidence and Preplanning Considerations Correspondence with attorney Journal Testimony of contemporary witnesses Doctor’s notes Notes of attorney Terms of will (leaving to imaginary friend) Holographic will that is a rambling mess Video-sound recording Dramatic change from other wills Try video tapes Try geriatric psychologist Hold a family meeting Explanation of why you disinherit Address a memo to the file

B. Undue InfluenceThis is when the will reflects the will of somebody who is not testator. It doesn’t have to be the villain who profits. Inherently difficult to prove. Undue influencers are smart. You have to crawl into the person’s head and try to see if their free agency was violated. General influence is not undue influence.

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1. Burden of Proof ShiftGenerally, it is for the contestant to establish a preponderance of evidence, but the burden shifts if all the following are proven:

Confidential relationship between testator and recipient/perpetrator—this is a relationship of trust. Attorney/client is presumed to satisfy. Others are maybe.

Superior position in the confidential relationship Perpetrator participated in making of the will by

drafting, setting appointment with attorney, being with the attorney

Perpetrator unduly profited under making of the will. This would be more than intestacy, or more than people with whom they had an equal footing.

2. Evidence and Steps to Take to Prevent Inconsistency with previous wills. Unnatural disposition (favoring the neighbor

over children) Testator was in a vulnerable condition Opportunity Motive Will made in secret In haste Independent counsel Opportunities to revise the will that were

ignored Participation of the wrongdoer’ Try meet alone with client Do a memo to file Try a geriatric psychologist

3. California6104: Codifies basic common law principles. Execution/revocation of will ineffective to extent it was procured by duress, menace, fraud, undue influence.

6112: Interested witnesses give rise to rebuttable presumption of undue influence. Unrebutted, the

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witness then receives what they would have gotten without will being admitted to probate. Interested witness not whacked if he’s a third witness. If actually interested though, the entire will goes per 6104.

a) DisqualifiedDrafter, partner of drafter, employee of drafter, fiduciary of testator, care custodian of testator are disqualified. Any spouse, 3rd degree relative of person or of person's spouse, or spouse of a third degree relative also disqualified. This is based on the consanguinity chart. (Within 3 degrees of consanguinity of disqualified person.) Exceptions per 21351 are that anybody within 5 degrees of consanguinity is okay. Also can get a certificate of independent review or cumbersome court approval.

4. Professional ResponsibilityCal4-400: illegal for attorney to induce client into giving a bequest

Utah 1.8: Attorney cannot solicit or prepare document that gives to attorney.

Exceptions for relatives

XV. Contesting a Will

A. No Contest Clause (NCC)Basically declares that anybody who contests the will is disinherited. The idea is to terrorize anybody who might have an idea of contesting the will. Absent an NCC, there can be benefits to challenging the will. With an NCC, the risks suddenly escalate. The path to victory involves challenging the entire will, and getting it with its NCC tossed.

The potential contester is going to have to figure out what the prior will or trust said, before contesting. You don’t want to go into this blind.

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The person making the will, if they are concerned about a specific person contesting the will, might need to make some incentive bequests.

Clauses are broad as possible, defining any attempt to invalidate any provision of the will has being worthy to trigger. Disputing the executor could be included. Broadness can cover conspiracies, too. The result could be to disinherit the issue of the heirs, too, so as to make it so that the contester and the contesters issue cannot win at all.

Always check before filing a petition to make sure there is no NCC.

B. Enforceability of NCCsNever Enforceable

New Cal and Utah

Old Cal, until 2010

Always Enforceable

Some will argue that they are too harsh. Furthermore, you don’t want to allow an NCC to child legitimate contests.

Cal 21311: NCC enforceable only if there was no probable cause for the contest. If there is a reasonable likelihood of success, you can proceed. UT 3-905 requires probable cause to bring a contest, else the NCC is enforceable. Also, UT 2-515

21304: NCC to be construed narrowly. 21305: Laundry list of actions that are not contests. 21307: As per 6112 and 21350, an interesting witness or disqualified beneficiary is not a contest. 21320: Declaratory relief as to the contest not falling under the NCC is allowable.

Surely the testator has a right to do what he or she would like.

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XVI. Formalities of ExecutionTypes of Execution:

1. Oral: An oral agreement could be enough to make a contract valid (except for statute of frauds), or a trust. There are certain burdens of proof, but it is certainly possible.

2. Signature sufficient: contracts, deed (notarized to get recorder to accept), trust.

3. Witnesses required: Contracts sometimes witnesses. Wills have to be witnessed.

4. Notarization: Not necessarily required, but almost always done. Verification of signature. Sometimes contract, needed to record the deed. Utah: power of attorney. California, a power of attorney is witnessed or notarized. Health care directives often notarized. Not trusts, but might as well.

5. Jur At: (something a notary can do): Person is there to swear before notary that what is in there is true and accurate. This is for affidavits. So why have two witnesses on a will when you could have no witnesses on a revocable trust? Theoretically, the person who has a will is dead when you're deciding whether it was actually signed by them. With a revocable trust, you use it daily for the rest of your life and are confirming it.

A. Wills Must Have Two WitnessesPolicy is that we want to be absolutely sure that this is what the testator wanted. However, the rules can often frustrate the true intent of the testator.

Cal 6110: Both witnesses have to see the guy sign or acknowledge at the same time.

Utah 2-502(1): Must be two witnesses who sign the will as witnesses and each must have seen guy sign it, heard guy say he signed it or acknowledge that it was his will. In a reasonable amount of time afterward, they have to sign it. They don’t have to be in the room at the same time and all that rigmarole.

1. Self-Proving WillA self-proving will has the testator sign, and then the witnesses sign an affidavit that is included with the

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will. Absent fraud, there is a presumption that all is legit. Previously, the witness would have to show up in probate court and testify. Thus, the two witness requirement in case somebody died.

B. Holographic WillPursuant to Utah 2-502(2) and Cal 6111, holographic wills are valid regardless of a lack of witnesses. A holographic will must be in testator’s handwriting and signed by the testator.

C. CodicilThis is an amendment to a will. The requirements for validity are the same.

D. Substantial ComplianceAs per Utah 2-504 and Cal 6110(2), if you can show by clear and convincing evidence (75% ish) that the testator intended this will to be his will, then in that case, the will shall be valid. As a result of these statutes, following the old rules puts you in a safe harbor.

E. Signing Will in One State, Dying in AnotherPursuant to 2-506 and Cal 6113, you follow the probate rules of the state of residence at death. However, wills are valid if it is valid in state of probate, if it was valid in state where it was signed, or valid in place of residence of testator when he signed it.

F. Incorporation by ReferenceAs long as the document to be incorporated exists at the time the will was signed and the will refers to it with reasonable specificity, it can be incorporated. Utah 2-510 and Cal 6130. The statutes make the common law less onerous. The list doesn’t have to exist at the time, but the list should refer back to the will. However, the list can dispose only of tangible personal property, and in California, there is a $5k cap on each item and a $25k cap on the list. Utah 2-513 and Cal 6132.

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G. Acts of Independent SignificanceUtah 2-513 and Cal 6131. You can leave money to whoever works for you, and say it that way in the will. The acts of hiring and firing are independently significant and float under the will. What you are doing is not a direct act to change the will.

H. Contract to Make a WillCal: 21700 and Utah 2-514. Maybe an old person needs somebody to care for them, but can’t sell them the house quite yet. Such an arrangement would be valid. But what if a couple enters into reciprocal or mutual wills? If one spouse dies first, the other spouse can change, because it would seem you need privity to sue on such a contract. If a couple really wants to do that, they need an irrevocable trust created at the death of one spouse or the other.

XVII. Revocation of WillsUtah 2-507. Cal 6120. 1) Express revocation, said in a new will. 2) Inconsistency: You have one will, but make another that is inconsistent. Changing who gets the car revokes the original will to that extent. Making a residuary is inconsistent enough to completely revoke the first will. 3) Some act. Something you do to the will with the appropriate intent. Burning, tearing, cancelling, obliterating, or destroying is sufficient.

Substantial compliance: Utah 2-503 stretches substantial compliance to revocation. Cal 6110 does not expressly say that.

A. Dependent Relative Revocation (Rare Common Law) Testator signs a new will, then revokes the old will by

an act on the assumption that the old will is no longer relevant. But the, the new will is for some reason not valid. If you can show that the only reason the revocation occurred was because the testator assumed the new will was valid, but it turns out the new will isn’t valid, then the old will comes back to stay and is deemed to have not been revoked. If the new will was totally different, then it is hard to establish that the only reason of revoking was for the basic update. This applies to any act cancelling or

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any other act that purportedly enacts a new plan of disposition—formal new will not required, here. So, where a moron cancels a provision, and writes it different, hoping to benefit somebody, you can try applying this if substantial compliance isn’t working for you.

Mistake of fact that is recited in the will. “I revoke because Judy died.” If Judy didn’t die, then the revocation is perhaps not valid.

The first instance is unlikely because of substantial compliance statutes.

XVIII. Will RevivalWill 1 was nice. Then Will 2 revokes Will1, perhaps expressly or by inconsistency.What happens if Will #2 is revoked by Act? Is Will #1 revived? No. UT 2-509, Cal 6123(a). No revival unless you can show that the testator intended revival. But, the assumption is that revival was not intended. BUT, Utah 2-509 says that if Will #2's revocation of Will #1 was partial, then in that case, the presumption is reversed and they presume that Will #1 part that wasn't revoked is revived. California definitely doesn't do this.

1997 2000 2003 Result

Valid Will 1997 will revoked by Act

Intestacy

Valid Will Valid will and 1997 will expressly revoked

2000 will governs

Valid Will Invalid Will which purportedly revokes the 1997 will.

1997 governs because it was never revoked because the 2000 will never went into effect.

Valid will Valid will 2000 will revoked by Act

Is the 1997 will revived? If you can't show that it was, then it wasn't revived and you have intestacy.

Valid Will 1997 Will revoked by Act b/c counting

Classic example of dependent relative revocation.

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on the 2000 Will

Problem #2 on p. 305 (or p. 269 perhaps) Safety deposit box has 3 documents. Will #1: Devises all property to A.Will #2: Devises all property to B.Other document: I hereby revoke Will #2. (Is this sufficient to revoke, though? Apparently you need a new will to revoke the old one. Check the statute--particularly, the definition section. 75-1-201(58) or Cal 88. Utah: A codicil, appoints an executor, or does nothing but revoke a will.H is the intestate heir. California, the same.How will the estate be distributed?

Arguments for Will #1

Arguments for Will #2

Arguments for Intestacy

1. Perhaps Will #1 was never revoked

2. Perhaps Will #2 was revived

1. To do this, show that Will #2 was revoked

a. The third document is according to statute qualified as a will and it definitely revokes. However, it would still have to comply with the execution requirements. So, if it doesn't comply, then tough, unless you're in a

If you represent B, you want to argue that will #2 was never revoked. So, rely on the other arguments for A.

1. Will #2 not revoked

2. Will #1 was revokedIn any instance, probably the only way to win is to be in a state without substantial compliance.

In a substantial compliance state, this guy will probably win.

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substantial compliance world. It is easier in Utah because substantial compliance applies to revocation. Could also argue that the new piece of paper is a physical act cancelling #2.

2. Show that testator intended Will #1 to be revived

a. We have no facts one way or the other, but whatever.

The approach for a situation like the above is to figure out which lawyer you are, and then figure out what has to happen for whoever to inherit. For instance, for Will #1 to win, you’ve got to get Will #2 invalidated, and Will #1 revived.

So, for validity, you’ll look for will definitions, other things that make a will valid.

XIX. Codicil Has Effect of Republishing Will

1998 2001 2003

Redate Will made Statute passed that applies to all wills applied after

Codicil made? The entire will is considered to have been signed in 2003

Republish

Will signed with an interested

Codicil with 2 disinterested witnesses. The original will is republished, and the

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witness interested witness problem disappears.

Revive #1

Will Will Codicil to 1998 Will. What the? So then, that makes 1998 the new will.

Revive #2

Will 1998 Will Revoked by Act

Codicil revives.

Redate Will Document to be Incorporated (probably not incorporated)

Codicil republishes the will and the document to be incorporated, now existing is okay

Ratify Ineffective Will

Valid Codicil--basically fixes the will. If the judge is in a good mood.

Republish

Will Omitted Spouse (as in, guy got married after signing will, and as a spouse, she has a right to a portion of the spouse)

Codicil--then what happens if it still doesn't say anything about her? Then she's not an "omitted spouse." The wife doesn't get squat.

XX. Extrinsic EvidenceStuff outside of the four corners of the will to help with interpretation.

1. Statements to the attorney2. Statements to friends3. Correspondence

A. Policy

1. When Should Extrinsic Evidence Be Let In?1. Argument: testator's intent should be paramount in

interpretation of a will.2. Perhaps the Will is just plain ambiguous and you

need the extrinsic evidence.3. Will is plain wrong and did not say what the testator

wanted.

2. When Should Extrinsic Evidence Be Excluded?1. Unwieldy

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2. Unreliable (maybe a devisee lies, maybe the testator was a filthy liar)

3. Judges and Juries are not in a good position to be able to rewrite a will, which is what will have to happen once you start admitting extrinsic evidence.

4. Threat of malpractice5. Best evidence of testator's intent is the will.6. Will is a safe harbor7. Flood of litigation would follow.8. Judges and juries are inevitably biased. They have

their own ideas about how the estate should have been distributed.

B. The Common Law Answer: Plain Meaning Rule: Exclude it unless there is am ambiguity?If there is ambiguity, you can let stuff in. There's a difference between patent and latent ambiguities. Patent is obvious and appears right on the face of the will. A latent ambiguity (good luck figuring it out) is where you read the will and it makes sense, but then you go to distribute property, you realize that the will doesn't seem to fit the world. Maybe the testator leaves property to people who don't seem to exist.

1. Problems with PMRDoesn't solve problem of when the will is just plain wrong. Mahoney case. Guy wanted to leave stuff to his twenty-five cousins. Lawyer said in will that he left to heirs. Turns out, his heirs weren't the twenty-five cousins. No ambiguity. Guy wants his money to go to the Scottish Society for Prevention of Cruelty to Children. The lawyer left out the "Scottish." No ambiguity, thus no extrinsic evidence.

C. California

Russell case: You can allow in extrinsic evidence certainly to clarify a patent ambiguity. You can use extrinsic evidence to reveal and resolve a latent ambiguity. But then, Cal declared that there was no ambiguity--it was clear because of the evidence, so no extrinsic evidence to resolve the ambiguity--lady wanted half to guy and half to dog. Well, half to dog is invalidated and half goes to niece even though extrinsic evidence was clear that she wanted it all to go to the dog.

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D. Utah

Basically, extrinsic evidence comes in if there is ambiguity. (Plain Meaning is the law, but courts just do what they reckon is right)Basically, they do what is right.BUT THEN UPC: xyz . . . .unless clear evidence that the testator intended otherwise. That doesn't really address the plain meaning rule, but it seems to invite the introduction of extrinsic evidence. The same phrase is used many times in the UPC all over. Mistakes don't seem to ever get in.

XXI. Rules of ConstructionGenerally, you should do what the will requires. However, sometimes the results may be confusing or ambiguous. In the absence of extrinsic evidence, etc., these rules come in handy.

A. Types of Bequests Specific: My car to Andy, my table to Bob. Pecuniary/General: For instance, $400 to my dog. Demonstrative: Rare. Courtney gets $75k to be payable from

Zions Bank Acct#555. Basically pecuniary, but it is to be paid from a particular account.

Residuary: Bob's dog gets everything else. Category separate from the rest:

o Precatory: Non-binding request--$100k to Bob with request that he'll take car of Billy.

o Non-Monetary Gifts of Love: Almost non-existent.

B. Suppose the Specific Gift/Property is Not in the EstateCommon Law: If it isn't there, the guy is out of luck. Unless of course, the guy gave the property ahead of time. Then, it is "adeemed by satisfaction." Or, maybe it was stolen, destroyed, doesn't exist. Then it is "adeemed by extinction."

1. Calif 21133-21134:

Pretty much the same thing. Exceptions: However, if a conservator sells something off that was

devised, then the devisee gets the value, if the estate can afford it.

Sold car on installment agreement? Then the unpaid balance goes toward the devisee of the car.

Also, unpaid insurance proceeds.

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Unpaid eminent domain proceeds. Or, testator has a promissory note he leaves to heir,

but then he forecloses, so he can get foreclosure proceeds.

Once the person pretty much has the cold hard cash, then there is nothing the heir can do.

2. Utah 2-606

Pretty much reverses the common law. Same exceptions as California. And then:

And recipient is entitled to the value of the property gifted but not in the estate, unless it appears from evidence that the testator would not intend that. This pretty much invites extrinsic evidence. Adeemed by satisfaction is clearly the idea that the heir shouldn't get more.

If the devisee is going to end up having to get a cash substitute, then they get tossed into the abatement of pecuniary gifts situation as if they had receive a pecuniary gift.

C. Transformation of Specific Property

Stock splits and stock mergers screws up the amounts of specific property available. Suppose Tippett leaves 100 stocks of Microsoft to Natalia. But what if there was a 3:1 stock split and at death Tippett now owns 300 shares of Microsoft stock. Or, what if there is a merger and the Microsoft stock becomes something else stock. The rule is that the devisee gets whatever it has transformed into. This as per Utah 2-605 and Cal. 21132.

D. Exoneration of Mortgage

Leave house to Bob, but it has a mortgage and will doesn't say whatever.

Common law: Personal representative has to pay off mortgage before distributing the house. Bob would be quite the winner.

UT 2-607 and Cal. 21131: If will is silent, the devisee would have to take the house subject to the mortgage. (If house is underwater, then the beneficiary could disclaim.

E. Abatement of Pecuniary Gifts

Say, you leave $100k to Emily and $50k to A.J. If there is $150k of cash in estate, then all is well. BUT if there isn't that much

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cash, and maybe plenty of other property. Then, the other residue property will have to be sold to pay the money. What happens if there just isn't enough property to pay the pecuniary bequestees? Say, $100k, $50k, and residuary bequests. The residuary heir doesn't get squat. How do you divide up the $100k for the $100k and $50k bequests? Pro rata.

F. Ademption of Pecuniary Gifts by Satisfaction

UT2-609 and Cal 21135. Recall the common law presumption that lifetime gifts resulted in an adjustment unless it could be shown from testator in writing that there should be no adjustment. The statutes reversed the presumption.So here, maybe there is a pecuniary gift in the will, but then devisee gets a bunch of money in life. Common law calls for adjustment, but statutes say that you do not make an adjustment unless the testator acknowledges in writing that an adjustment should be made. This applies to beneficiaries under wills.

G. Demonstrative Bequests (this isn't super well developed or consistent across the states)

It's like a specific gift. Even if pecuniary gifts have to abate, the bequest of $50k from an account just goes straight to the person. It is treated like a specific bequest to the extent that it is there. BUT to the extent that the money mentioned is not in the account, it is treated like a pecuniary gift.Maybe if one devisee gets a $50k pecuniary, and $50k demonstrative, the demonstrative would take precedence.

H. Residuary Bequests

Best way to screw somebody.It's not a good way to give something to somebody if you want them to actually get something.

I. Beneficiary Predeceases Testator

Do what the will says. But if will says nothing, then here's what you do, but really, when you draft will, remember to say what if.Common law:

1. Gift to individual: The gift lapses if beneficiary pre-deceases. It's like the gift was not made. And then basically to the residuary beneficiary.

2. Class Gift--gift to a class: Say, to siblings. I leave a million bucks to my siblings. What if a sibling pre-deceases. Common law is lapse. Gift passes as if the gift to that

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deceased sibling had not been made. It goes to the other members of the class.

3. Residue: Suppose the guy getting the residue pre-deceases. Lapse. The residue is passed through intestacy. Goes to testator's intestate heirs.

4. Multiple residuary beneficiaries: Gift to the one member of the class lapses.

Utah 2-604

J. Anti-Lapse StatutesTheoretically, lapse is not always equitable, particularly where the predeceased beneficiary was family, so it is logical to believe that testator would have liked it to go to the beneficiary's issue. That's what anti-lapse statutes generally do.

1. Utah's Anti-Lapse

If it doesn't apply common law wins, and whatever it is goes to residuary or residuaries and then onto testacy as may be appropriate.2-603 (one of the three which work the same, there's one for wills, trusts, and beneficiary designations. This applies the same across the board.)

1. Is the will explicit? 2-603.2.d. If will is silent, keep asking questions.

2. Was pre-deceased devisee a grandparent/descendant of a grandparent/step child of the testator? If no, then the anti-lapse statute does not apply and you're in the lapse zone. (might not count if it's a class with somebody coincidentally related.) 2-603.2

3. Does will have survivorship language? I leave my table to Bob if he survives me. If he didn't survive, he doesn't get it. If no, then move on. 2-603.2.c

4. Does predeceased devisee have living descendants? (step-child doesn't count) If yes, then the anti-lapse statute applies and the person who is a descendant scores big according to per capita by generation.

This applies to class gifts in such a way as to make it so that property going to pre-deceased member of class goes to issue of the pre-deceased member of class.

All this baloney doesn't apply when you leave your stuff to your issue or descendants or whatever. That's when you start using the charts. This is for when you have a somewhat specific bequest and the person pre-deceased.

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Lapse or anti-lapse applies broadly to wills, trusts, beneficiary designations, and powers of appointment. 2-604.2 for anti-lapse state.

IN UTAH: if the Anti-Lapse comes to the rescue, then the per-capita at each generation kicks in with the bequest.

2. California Antilapse Is will explicit? 21110.h and 21111 A.1 Was predeceased devisee kindred? 21110.c Was the

idea of leaving it to them because of their family relation? It isn’t very clear in the statute.

Survivorship language to head this off? 21110.b. Does predeceased have living descendants If lapse wins on default, 21111.a.2-3. If anti-lapse wins, the bequest goes to the

beneficiary’s issue under Equal Share Method.

How does power of appointment deal with lapse? Say like Sam Settlor makes Inge the income beneficiary and gives power of appointment to adjust the remainder heirs. So, Inge has broad power of testamentary appointment, and gives it to someone who isn’t even her kid. Then this other person dies. The appointee is dead, in other words. You use all the same analysis. As for statutes, it seems that permissible appointee needs only be a relative of either the settlor or power of appointment person. If the power of appointment lapses, apparently the trust already had a designation of the residuary heirs or whatever.

K. SituationsIntestate heir pre-deceases the decedent? Then you use the diagrams.

Intestate heir survives the decedent and date of distribution, then the heir does what the heir wants to do.

Intestate heir survives decedent, but dies before distribution? Property goes to heir’s own estate.

How does this change with a will or trust? If guy survives the distribution date, he can go to Wendover. Beneficiary dies before decedent? All that stuff we talked about. Follow will, but

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if will silent, you have lapse v. anti-lapse. And then, survives testator but not date of distribution. Then it goes to the beneficiary’s own estate.

XXII. Omitted Spouse or ChildSay like, testator picks up new wife or child and fails to have opportunity to make a new will.

A. Spouse

1. Cal 21610-21612 Omitted spouse is entitled to intestate share. BUT. In California, intestate spouse gets the community property and gets portion of SP that would be all, ½ and 1/3 depending on other relatives. The omitted spouse, aka pretermitted spouse, gets the community property share, but no more than ½ of the separate property and as low as 1/3. The other half goes as per the will. BUT omitted spouse doesn’t get share if it appears that the omission was intentional (republication by codicil would be pretty damning). Signs estate plan day before he gets married. Or, if spouse was provided for elsewhere and that was in lieu of being in will. Like an irrevocable trust.

Where does this portion come from? It is taken first from any property that would be passing intestate anyway. Then, you take from the will’s beneficiaries proportionally. Even from the residuary proportionally. (Which is odd, but whatever)

2. Utah—2-301Sucks for omitted spouse. They get: his or her intestate share of property that is not devised in the estate plan to the decedent’s children by prior marriage. So, loses on opportunity to get stuff willed to children. Then only gets a fraction of the leftover.

Where does this portion come from? From spouse, intestacy property, residue, pecuniary gifts, gifts.

This flies unless it was an intentional omission or the spouse provided for elsewhere. Republication by codicil would be pretty damning.

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B. ChildChild born after will, and will is not revised or whatever afterward. Also known as pretermitted.

1. Cal 21620-21623Rule: Child is entitled to his or her intestate share. Unless: the omission was intentional, the child was otherwise provided for, or if substantially all of the estate was left to the other parent of the omitted child. Paid from intestacy, then proportionally from other stuff.

2. Utah 2-302Rule: If there are no other children at all, other than the omitted child or omitted children, the omitted child gets his or her intestate share. Unless: The omission was intentional or the omitted child was otherwise provided for. (No substantial portion to other parent exception.) Paid from: Intestacy property, residue, pecuniary gifts, specific gifts.

Rule: If there were other children at time the will was made, then you take the property left to the other children and add it all up and then give the value of the fair share to the omitted child. Paid from: Other children’s bequests proportionally. Unless: Intentional, otherwise provided for.

XXIII. Divorce

A. California6122: Revokes revocable stuff (bequests and nominations). Revokes gifts, fiduciary appointments. Revokes executor appointment. Anything in revocable trust. But not irrevocable trusts, etc. Effect: Divorced spouse is deemed to have predeceased the testator. But, does anti-lapse statute apply? Under California anti-lapse statute, only kin can benefit. Also 61221 this applies equally to registered domestic partners. Relatives of the divorced spouse can still get stuff.

B. Utah 2-804Revokes what is revocable in bequests, nominations. In effect, disclaimed (gift refused). Basically pre-deceased. Does anti-

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lapse apply? No, under Utah anti-lapse, even a current spouse isn’t grandparent, descendant of grandparent, etc. Statute specifically says relatives of former spouse don’t get property (Cal doesn’t say this).The divorce also severs any joint tenancy arrangements. (Cal doesn’t say this). Converts them to tenant in common arrangements.

XXIV. Homicide

A. Cal 250Effect of beneficiary killing someone? Revokes the bequest. Effect is that the slayer predeceased. The killer’s kids don’t take under the anti-lapse statute. What about gifts to relatives of the killer? Not revoked?

B. Utah 2-803No conviction is needed. Preponderance of evidence showing that homicide meets elements of felony. Revokes bequest to kill, as if killer had disclaimed, which is same as pre-deceased. Kids of slayer might receive because Utah statute doesn’t have same language. As for relatives, not revoked.

XXV. DisclaimersYou can refuse to take stuff under the will. Why would you do that? Maybe you have environmental liability. Maybe the property is underwater. Maybe there are tax benefits. So maybe, daughter doesn’t want the property or doesn’t want it taxed when she dies, so she executes a disclaimer and then property, if the estate is set up that way, passes directly to the grandchildren without the extra level of tax. (Disclaimer, that is as if predeceased treatment, and the generation skipping tax does not attach.)

XXVI. Surviving Spouse’s Elective ShareWhat happens in common law state where the title of property sits with the husband? In common law states, the widow/widower is entitled to an elective share. In Utah, the elective share is 1/3 of the Augmented Estate. So, widow/widower can go in and say they were disinherited and say they’d be better off with 1/3 of augmented estate. The augmented estate is pretty much the marital property which is pretty much what the community property would be in a community property state. No such thing in Community Property states. In

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theory, those states give the surviving spouse the community property.

XXVII. Family ProtectionUtah

Homestead Allowance $22,000 Family Exemption: $15,000 Family Allowance $27,000

California: Discretionary according to what the court wants to give. Given up front to enable family to get by during the period of probate administration.

XXVIII. California ProbateThis is very messy, and the mess could be avoided by a decent revocable trust.

When do you have the probate? Will. Intestate succession.

Why probate? Get property into the right hands and make sure the property has clean title.

A. Petition for Probate Appointment: You’re asking for appointment of the

personal representative. Judge can override will to pick someone if things look bad.

Will: You’re asking that the will, which is attach to the petition, be admitted to probate and be regarded as the valid will. If there is on will, you’re requesting that the estate be distributed accordingly.

Notice: You’ll have to provide the names and addresses of all the people named in the will and people who would be the decedent’s intestate heirs in an intestacy situation. Notice.

Hearing: You want to object to all this, you show up to a hearing. The hearing could be set as far as 2 months out. You could screw up and get it set even further if you don’t get notice sent out.

“Letters Testamentary” or “Letters of Administration”: A sheet of paper that is the judge-signed evidence that the personal representative has authority. The bond would have to be in place.

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Bond: Insures that the personal representative isn’t going to run away with all the estate’s money. The premium is usually .25% of the value of the estate per year. The fee comes from the estate. The bond should only cover the stuff IAEA allows them to do something with. But if they do get stuff sold with court approval and it becomes something the rep can dispose of, then the bond coverage should increase.

IAEA: Judge decides what powers rep has under Independent Administration of Estates Act. Judge makes the decision, but the will might specify a preference.

B. Preliminary Management Responsibilities Marshal: The rep presents the letters to the bank and

requests to have control of the account and have it named “Bobby Scott, Executor of the Estate of Scotty Bob.”

Inventory: Rep has to get appraisals of all the junk, and in California get an independent referee. Value is as of the date of death.

EIN: This estate gets an employer identification number you can put on all the income tax returns that will be filed.

Bills: They will have to be paid on an ongoing basis. Creditors: Must deliver notice to all known creditors,

requiring a claim submission within 4 months or be barred thereafter. The personal rep evaluates claims and whether they should be paid. Creditor claims come off the top.

C. On-Going Management Responsibilities Taxes:

o Decedent’s final 1040 has to be filed (also state taxes)

o Estate’s tax stuffo Estate 1041, the fiduciary income tax return. The

estate is a tax-paying entity. You pay each year the estate exists.

Accounting: Making accounts, based with opening balance, the expenses of attorneys, accountants, etc, distributions, and then the closing balance. If the beneficiaries don’t like what they see, they can go to the court.

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Sale of Assets

D. What if a Revocable Trust?Would have to send out notice, would have to get an EIN for taxes, would have to marshal, would still have to pay bills, would still have to send notice to creditors. Would have to pay all the taxes. Basically, no court stuff.

E. Independent Administration of Estates ActCalifornia, designed to make probate simpler.

Full: Need approval for transactions between personal representative and the estate and between the personal rep’s attorney and the estate.

Limited: Court approval needed only for real estate transactions, transactions between the personal representative and the estate, and transactions between the personal representatives attorney and the estate.

None: Have to get court approval, notice, hearing for practically everything. That includes two month delay in getting a date.

XXIX. Utah Probate Files with clerk, sends out notifications Informal: Notice sent out to possible intestate heirs, and if there

is no objection after ten days, the letters are issued, and the executor can do everything. No appearance before a judge.

Formal: An objection is filed results in formal probate. The formality is limited to that particular part of the dispute.

Supervised Administration: Something requested if the personal representative is argued to be untrustworthy. Court approval needed for distribution. If you want to stick them to more than that, you have to file formal objections. This most difficult way in Utah is roughly equivalent to the easiest way in California.

XXX. DistributionOrder for Final distribution specifically says who gets what, identifying it all and all that. You record that the same way you would record a deed. The order should contain all the relevant numbers, etc. Same with brokerage accounts or bank accounts. It is evidence that you’re entitled to the property. (California)

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Utah: The personal representative, even in informal probate, has authority to sign a deed as personal representative to the grantee.

XXXI. Ancillary ProbateWhat happens when someone dies in Utah, probate is opened in Utah, and there is California real estate at stake? The court and the court’s appointed personal representative doesn’t have authority to deal with California real estate. You’d have to open up ancillary probate in California. To do that, take letters to California probate court and ask court to appoint personal representative as ancillary administrator for the California real estate at stake. Ancillary probate is opposed to primary probate. If it’s the opposite, dies in in California and has property in Utah, then, ancillary probate in Utah. It’s easy in Utah. All he has to do is file proof of authority in Utah court, sans judge appearance.

XXXII. Special AdministrationEmergency probate? Who will have authority to do things that are immediately necessary. You go ex parte, say there could be substantial loss to the estate. If the judge agrees with you, he/she will give you letters of special administration. The authority will be very narrow and carefully circumscribed. Authority disappears when an actual personal representative is appointed.

XXXIII. Guardian Ad LitemWhat happens when you have a minor beneficiary and there is a matter arising that affects? Minor doesn’t have legal capacity to act on their own behalf. 1) Turn to the parents, who are the natural guardians. But, there might be a conflict of interest. 2) So then, maybe you could have virtual representation. That’s where if the child’s interest is dependent on the parent getting the best, then that’s not the same as a conflict of interest. For instance, an income beneficiary versus a remainder beneficiary and his children, the contingent remainder beneficiaries. A similar situation happens where there are classes with both adult and minor members who are treated equally. 3) Guardian ad Litem appointed for child’s best interest if the natural guardians and virtual representation isn’t working to actually, in fact, protect the interests of the minor.

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XXXIV. Fiduciary Duties Investment: They need to prudently invest, follow the

Prudent Investment Act, they have to have a diversified portfolio of assets. They have to be prudent about maintaining stuff—insurance. If a prudent guy would have done it with his own stuff, the fiduciary should do that. Keep the property prudently invested.

Keep Beneficiaries Informed: Must ensure that the beneficiaries are kept informed, have copy of trust, get annual accountings, get news about lawsuits or whatever.

Segregate Assets: Keep assets segregated from your own personal assets. No comingling of assets.

Duty of Loyalty: The fiduciary should really really not being entering into interactions with the estate or the trust. You shouldn’t be buying from or selling to the estate or trust. You would need court approval in California. In Utah, you shouldn’t do it and such things could be voided or set aside. You act strictly in the best interests of the estate or trust. If you are the owner of a competitor of an asset in the trust, you probably shouldn’t be the fiduciary.

XXXV. Estate Tax What’s Included?

o Take to Wendovero Revocable trusto Joint tenant contributionso General power of appointment

What’s Not Included?o Limited power of appointmento Irrevocable gifto Gift to an irrevocable trusto Trustee of an irrevocable trust where you’re the

beneficiary where limited by an ascertainable standard health/education/support/maintenance (unless you’re an idiot and write “comfort” into the trust). Must be ascertainable!

Deductionso Spouse—unlimited marital deductiono Tax-exempt charityo Exemption that everybody has--$5mil/$1mil per person

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XXXVI. Gift Tax Non-Taxable

o $13k per year per donor and doneeo Medical or educational gifts directly to the provider

Taxableo Everything else (reduces the exemption on the

estate tax)

A. Annual Exclusion GiftingConsider that a H&W can gift to each child, each child in law, each grandchild for both the H&W. Then consider the time value of money. The value gotten by the heirs is also not taxed.

B. 2012 Opportunity$5 Mil and $ 1 Mil thingy. Maybe you can do the $5Mil now and escape when the rate plummets.

XXXVII. Fractional Interest DiscountsYou can fractionalize the asset. If you die owning 100% of an apartment building, then that will be taxed. What if you only own 99% of the apartment building? What is the worth then? Less than 99%. Could be 75%. That’s economics. So maybe you give 1% to your kid.

Sometimes, people do the same thing with an LLC or LP. They pile everything in there and then give off 1% of it. Watch out, though. If you don’t have a legitimate reason to create, the IRS will be all over you.

XXXVIII. Generation Skipping Transfer Tax (GST)Not estate tax, but looks similar. Basically, grandpappy leaves estate to grandchildren so that it only gets taxed only once on the way to the grandchildren’s hands. Or maybe grandpa puts stuff in a trust with his daughter as the income beneficiary and thus benefits her, but doesn’t get taxed when she dies.

The tax comes in after the 50% estate tax on the grandpa and then taxes half of that to the grandchildren. The result is the grandchildren getting 25%. You also have a $5M on this tax, though. If we’re dealing with non-relatives, 37.5 age difference constitutes a generation skip. Also doesn’t kick in if a generation has deceased.

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XXXIX. Credit Shelter Trusts aka By-Pass TrustsMaybe you have a husband and wife with $3M. If husband dies and leaves to her, hasn’t he wasted his exemption because it’s going to be taxed like crazy when the wife dies. So maybe you make a trust that shelters the husband’s $1M exemption. The wife is the trustee/beneficiary with ascertainable standards. Result is that the stuff isn’t taxed as part of the wife’s estate. Result is that only $1M would be subject to estate tax. Something called portability allows this to happen automatically. It might disappear on Jan. 1.

A. Q-TIP Marital TrustWhat do you do with the stuff leftover after the shelter trust maxes out? Create a trust for the benefit of the surviving spouse as long as surviving spouse gets all income and any principal that heads out. Surviving spouse must be only person. It is deemed to be passing to spouse and thus exempt from estate tax. This is still taxed at death of surviving spouse, BUT it ensures that she doesn’t leave it to someone not the husband’s child.

XL. Life Insurance TrustBecomes owner and beneficiary of a policy. The policy proceeds pour into the trust and will not be taxed as part of the estate of the person who dies. Otherwise, the owner/estate beneficiary of a life insurance policy could get taxed under estate tax.

The only statute dates you need to worry about are substantial compliance and no contest in California, both effective on Jan 1, 2010.

120 HOURS is the pre-decease rule, not 120 days!!!!!!!!!!!

UTAH omitted spouse/intestacy deals with surviving children of another marriage.

Entity Creator Legal Title Beneficial Interest

Estate Testator/Decedent

Personal Representative

Devisees/Heirs

Revocable Trust Settlor Trustee/Settlor SettlorIrrevocable Trust Settlor Trustee Beneficiaries

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Conservatorship Court/Conservatee

Conservator Conservatee

Agency Principal Agent PrincipalSpecial Administration

Testator/Decedent

Special Administration

Devisees/Heirs

Wills and Estate review, 5 PM Wed Dec 5

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