what is an insurable interest? when must an insurable interest exist—at the time the insurance...

• What is an insurable interest? When What is an insurable interest? When must an insurable interest exist—at the must an insurable interest exist—at the time the insurance policy is obtained, at time the insurance policy is obtained, at the time the loss occurs, or both?the time the loss occurs, or both?• Is an insurance broker the agent of the Is an insurance broker the agent of the

insurance applicant or the agent of the insurance applicant or the agent of the insurer? insurer?

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• What are the basic requirements for What are the basic requirements for executing a will? How may a will be executing a will? How may a will be revoked?revoked?• What is the difference between a What is the difference between a per per

stirpes distribution and a per capita stirpes distribution and a per capita distribution of an estate to the distribution of an estate to the grandchildren of the deceased? grandchildren of the deceased?


• What are the four essential elements What are the four essential elements of a trust? What is the difference of a trust? What is the difference between an express trust and an between an express trust and an implied trust? implied trust?


• Insurance is a contractual Insurance is a contractual arrangement for arrangement for transferring and transferring and allocating riskallocating risk (risk management). (risk management).• Risk Management: Risk Management: Involves the Involves the

transfer of certain risks from the transfer of certain risks from the individual to the insurance company individual to the insurance company by a contractual agreement.by a contractual agreement.


• Classification of InsuranceClassification of Insurance. Insurance . Insurance is classified according to the nature is classified according to the nature of the risk involved.of the risk involved.• Insurance TerminologyInsurance Terminology..–Policy (Insurance contract).–Premium is the consideration to be

paid to the insurer.


• Insurance TerminologyInsurance Terminology (cont’d). (cont’d).–Underwriter (usually an insurance

company).–Broker v. Agent.

• Insurable InterestInsurable Interest..–A person can insure anything in which

he or she has an insurable interest.


• Insurable InterestInsurable Interest (cont’d). (cont’d).–A person can insure anything in which

he or she has an insurable interest.–Life Insurance. –Key-Person Life Insurance. –Property Insurance.


• Insurable InterestInsurable Interest (cont’d). (cont’d).–Life Insurance: a person must have a

reasonable expectation of benefit from the continued life of another.• Insurable interest must exist at the time

the policy is obtained.• Interest may be financial or relational

(blood or affinity)..


• Insurable InterestInsurable Interest (cont’d). (cont’d).–Property Insurance: insured derives a

pecuniary benefit from preservation and continued existence of certain property. Owner must have insurance at the time of loss.


• The Insurance ContractThe Insurance Contract..–Governed by the general principles of

contract law, and regulated by the state.–Application for Insurance: is an offer,

which insurance company can either reject or accept. Misrepresentations can void a policy.


• The Insurance ContractThe Insurance Contract (cont’d). (cont’d).–Effective Date. –Coinsurance Clauses. • If owner insures her property for at least

80% of its value, owner will be able to recover up to the face value of the policy. • If owner insures for less than 80%, owner

will be responsible for a proportionate share of the loss.


• The Insurance ContractThe Insurance Contract (cont’d). (cont’d).• Incontestability Clauses. State statutes

sometimes provide that once a life or health insurance policy has been in force for a specified length of time, the insurer cannot contest statements made in the application.


• The Insurance ContractThe Insurance Contract (cont’d). (cont’d).–Interpreting the Insurance Contract.• Courts interpret ambiguity against the

insurance company.• Uncertainty as to whether policy actually

exists is resolved against the insurance company. • CASE 45.1 Estate of Luster v. Allstate Estate of Luster v. Allstate

Insurance Co. Insurance Co. (2010).


• The Insurance ContractThe Insurance Contract (cont’d). (cont’d).–Cancellation. Insured can cancel policy at

any time, and the insurer can cancel according to terms of policy.• Insurer must give written notice of

cancellation.–Good Faith Obligations.–Bad Faith Actions.


• The Insurance ContractThe Insurance Contract (cont’d). (cont’d).–Bad Faith Actions: tort action if insurer

denies coverage, insured may seek damages beyond the policy, as well as punitive damages.


• The Insurance ContractThe Insurance Contract (cont’d). (cont’d).–Defenses Against Payment.• Insurance policy procured through fraud,

misrepresentation.• Insurance company lacked an insurable

interest (void from beginning). • Improper actions, contrary to public

policy, or illegal.


• Will provides for a Will provides for a Testamentary Testamentary dispositiondisposition of property. of property.–A will is the final declaration of how a

person desires to have his or her property disposed of after death.


• Terminology of WillsTerminology of Wills..–Person who dies with a will, dies testate

(intestate without a will).–Executor: personal representative

named in a will.–Administrator: personal representative

appointed by the court when person dies without a will.


• Terminology of WillsTerminology of Wills (cont’d). (cont’d).–Devise: gift of real property.–Bequest (legacy): gift of personal

property. Recipient is a devisee or legatee.


• Types of Gifts: Types of Gifts: specific, general, or specific, general, or residuary .residuary .–Specific: describes particular property

in the estate.–General Devise: uses less restrictive

terminology.–General Bequest: specific sum of

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• Types of Gifts Types of Gifts (cont’d).(cont’d).–Abatement: when assets of the estate

are insufficient to pay all general bequests.–Residuary: what is left in the estate

after all debts and gifts have been made.


• Requirements for a Valid WillRequirements for a Valid Will..–Testamentary Capacity and Intent:

requires a “sound-mind” and intent.–Writing Requirements: can be

handwritten, or holographic will (but nuncupative (oral) will is possible). Signature Requirements: at least two witnesses, so will is ‘self-proving.’


• Requirements for a Valid WillRequirements for a Valid Will (cont’d). (cont’d).–Publication Requirements: not required

under the UPC.• Revocation of WillsRevocation of Wills: : executed will is executed will is

revocable by the maker anytime before revocable by the maker anytime before death.death.


• Revocation of WillsRevocation of Wills (cont’d). (cont’d). –Revocation by Physical Act.•CASE 45.2 Peterson v. Harrell Peterson v. Harrell (2010).

Can a provision be canceled without revoking the entire will?

–Revocation by Subsequent Writing: called a codicil.–Revocation by Operation of Law.


• Probate Procedures.Probate Procedures. –Informal Probate Proceedings: Family

Settlement Agreements, and Small Estates.–Formal Probate: larger estates,

guardianship appointment, and trusts for minors or incompetent persons.


• Probate ProceduresProbate Procedures (cont’d). (cont’d).–Property Transfers outside the Probate

Process. • Living Trusts.• Joint Ownership of Property.• Gifts Intervivos (while one is alive).• Life Insurance Policies.• Individual Retirement Accounts (IRA).


• Intestacy Laws.Intestacy Laws.–Statutes of descent and distribution

which attempt to carry out the likely intent and wished of the decedent who died without a will.–Surviving Spouse and Children:

surviving spouse usually receives ½ of the estate if there is a surviving child.


• Intestacy LawsIntestacy Laws (cont’d). (cont’d).–Surviving Spouse and Children (cont’d).• Surviving spouse usually receives only ½

of the estate, 1/3 if two or more children, 1/2 if one surviving child, or entire estate if no children or grandchildren.• If no surviving spouse or child the order of

inheritance is: lineal descendants, and then collateral heirs (if no lineal descendants).


• Intestacy LawsIntestacy Laws (cont’d). (cont’d).–Stepchildren, Adopted Children, and

Illegitimate Children.• Stepchildren -- not considered children of

deceased.• Adopted children -- considered children of

deceased.• Illegitimate -- must prove paternity.


• Intestacy LawsIntestacy Laws (cont’d). (cont’d).–Distribution to Grandchildren.• Per stirpes distribution: heirs take the

share their deceased parent would have taken had that parent lived.


• Intestacy LawsIntestacy Laws (cont’d). (cont’d).–Distribution to Grandchildren.• Per capita distribution: each person takes

an equal share of the estate.


• A trust is any arrangement whereby A trust is any arrangement whereby property (real or personal) is held by property (real or personal) is held by one party for the benefit of another.one party for the benefit of another.–Essential Elements: designated

beneficiary, designated trustee, funds sufficiently identified to enable title to pass to the trustee, actual delivery to the trustee with the intention of passing title.


• Express Trusts.Express Trusts. –Living Trusts: revocable living trusts,

irrevocable living trusts.–Testamentary Trusts.–Charitable Trusts.–Spendthrift Trusts.–Totten Trusts.


• Implied Trusts.Implied Trusts. –Constructive Trusts: arises by operation

of the law in the interest of equity and fairness.–CASE 45.3 Garrigus v. ViarengoGarrigus v. Viarengo (2009).

What circumstances prompted the court to create a constructive trust?


• The TrusteeThe Trustee: : person holding trust person holding trust property.property.–Trustee’s Duties: honesty, good faith,

and prudence in administering the trust and high degree of loyalty to beneficiaries.


• The TrusteeThe Trustee (cont’d). (cont’d).–Trustee’s Powers: state law governs in

the absence of specific language in will or instrument.–Allocations Between Principal and

Income.


what is an insurable interest? when must an insurable interest exist—at the time the insurance...

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