wills and trusts final examination · wills and trusts final examination fall 2010 prof. y. ascher...

WILLS AND TRUSTS

Final Examination

FALL 2010

Prof. Y. Ascher

Instructions:

There are three (3) questions in this examination. You will b.e given three (3) hours to complete the examination.

Good Luck

1

Wills and Trusts 2010 Final Exam Prof. Y. Ascher

In 2000, Hemy and Wilma got married.

Question #1

In 2001, Hemy executed a valid Will that provided as follows:

a. I give the sum of$10,000 to my brother, Bob. b. I give the residue of my estate to my wife, Wilma, if she is living, and if not, to my

present existing heirs at law.

·In 2002, Hemy and Wilma had a child named Denise.

In 2003, Hemy and Wilma dissolved the marriage. As part ofthe divorce property settlement, Hemy established a valid Trust for Denise. The Trust was funded with $200,000.

In 2007, Hemy married Betsy. Betsy had a child from a prior marriage named Sam. Sam was 5 years old in 2007. On several occasions, Hemy told his neighbors how much he loved Sam and wished he could adopt him, but he was unable to do so because Sam's natural father won't consent.

As a wedding present, Hemy gave Betsy a fully paid-up life insurance policy on his life, with death benefits of $200,000. Betsy was named as the beneficiary, and Hemy as the owner. The gift card accompanying the policy, in Hemy' s handwriting said "I want to make sure you are fine should something happen to me. This policy should ensure your well-being." The card was dated and signed by Hemy.

In 2010, Hemy and Betsy died in a plane crash.

Along Hemy's papers was his original2001 Will. However, the $10,000 figure in Article 1 was crossed out and $25,000 was handwritten in Hemy's hand above the $10,000 figure. Next to the $25,000 figure, Hemy had written "Have fun. Henry 10/10/02"

Hemy's estate consisted of a House he purchased in 2008, taking title in his name alone, valued at $300,000; a community property stock account valued at $200,000 and a "Paid on Death Account" naming Denise as the beneficiary. The Account was for $100,000 and had been created with community property funds. Betsy was unaware of the account.

Hemy and Betsy are survived by Hemy's brother, Bob, Hemy's mom (Mom), Wilma, Sam and Denise. How should the House, Stock portfolio, POD Bank Account and Life Insurance policies be distributed?

2

1)

1) Is the 2001 will Valid:

Individuals have a constitutional right to transfer property upon their death however they

see fit so long as it does not violate the law or is against public policy. A will does not speak

until the testator dies, therefore, the beneficiaries merely have an expectancy in the gift until the

death of the testator. A will is valid if there is 1) present testamentary intent to create a will at

the time of executing the will, 2) the testator is competent at the time of executing the will, 3) the

will is signed by the testator, and 4) the will is witness by two individuals.

The facts state that the 2001 will was valid and therefore I will presume that all of the

above requirements under the Statute of Wills has been met.

The terms of the. will state that Henry (hereafter H) intended to give $10,000 to his

brother, Bob.(herafter B) and the residue of his estate to his wife, Wilma, (hereafter W) if she is

living and if not to the present existing heirs.

2) What is Denise's interest under the 2001 Will:

The facts state that Hand W, while married, had a child named Denise (hereafter D.) H

and W had Din 2002 a year after H exeucted his will. D may argue that she is an omitted child

under the will and therefore she should be able to take her intestate share of H's estate.

Omitted Child

Where a testator drafts his final will prior to the birth of his child, or the discovery that he

has a child and does not provide for the child to take upon his death, the child is presumed to

have been accidentally omitted from the decedent's will. The omitted child will therefore be able

to take their intestate share as though the decedent had died without a will.

D however, will not be considered an omitted child since upon the divorce of H and W, H

created a trust for the benefit of D. Therefore, D was not omitted from H's estate plan. Rather,

D has the right as a beneficiary to the 200,000 dollars which was placed in a trust for the benefit

of D.

The facts state that the trust was a valid trust. A trust is valid where 1) the settlor had

the intent to create a trust, 2) the settlor was competent at the time of creating the trust, 3) the

trust has a valid trust purpose, 4) the trust is properly funded with property, 5) the trust has

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(Question 1 continued)

ascertainable beneficiaries, and 6) the trust has a trustee.

Since the facts state that the trust is valid, I will presume that all of the above

requirements have been met. It is unclear whether H created an Living trust or a testamentary

trust. If the trust is a living trust then D would receive the benefit from the trust prior to the

death of H. However, if the trust is testamentary, D will receive the trust property upon the

death of H.

Pay on Death Account:

A pay on death account is a will substitute. The facts state that H placed 100,000

dollars of community property in a pay on death account for the benefit of D. D will have the

right to receive this property upon the death of H. However, since the property was community

property and Betsy did not agree to the use of the property ("Betsy was unaware of the

account") Betsy will have a claim to half of the 100,000 dollars. This is her half under the

community property rules of California. D will receive the remaining half of the 100,000 dollars.

3) What are Wilma's rights under the 2001 Will

The facts state that Hand W were married at the time of the 2001 will's execution. W

was given the residue of the estate under the will so long as she outlived H. W will claim that

she has a right to the residue of H's estate after his death in 2010.

Revocation

A will can be revoked at any time during the testator's life in a number of manners. A

portion of a will allowing a spouse to take will be revoked upon a dissolution of marriage. This

includes gifts that where made to the spouse's separate children.

Since H and W divorced in 2003, two years after the execution of the will, the provision

in the will giving W the residue of the estate would be revoked. W will be treated as though she

predeceased H. Since W is treated as though she died before H, under H's will in 2001, his

"present existing" heirs will take the residue of his estate. See bellow for further discussion.

4) Sam's rights under the 2001 Will:

The facts state that after the dissolution of Hand W, H remarried a woman named

Betsy. Betsy entered the marriage with a five year old boy named Sam from a previous

marriage.

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Omitted Child

Sam (hereafter S) will argue that he is an omitted child of H's under H's will. S must

demonstrate that the decedent, after his final testamentary instrument was executed had a child

or learned of a child that he did not provide for. The child will therefore be treated as though he

was accidentally omitted and will be able to take his intestate share of the estate. A child will

not be considered omitted if it is demonstrate that the testator intentionally omitted the child by

clear and convincing evidence, or that the child was given a gift in lieu of taking under the will,

and finally if the child's other parent was given substantially all of the estate of the deceased

parent.

S must first demonstrate that he is the child of H. The facts state that S has a natural

father who is not H from B's previous relationship. However, S may still demonstrate that he

can inherit from his stepfather by showing clear and convincing evidence that H intended to

adopt him but for a continuous legal barrier and the child began living with H during his minority

and the relationshipo continued for their joint lifetimes.

The facts state that Sand H started living together when S was 5 years old.

Additionally, there are no facts to suggest that H and Sever lived apart from that point on.

Additionally, H "told his neighbors how much he loved Sam and wished he could adopt him, but

he was unable to do so because Sam's natural father won't consent" This would demonstrate

clear and convincing evidence of an intent to adopt but for a continuous legal barrier.

Since S can be determined to be the child of H for purposes of inheritence, S may claim

that he is an omitted child since H did not provide for him under his will in 2001 or in the trust in

2003. S will be able to take his intestate share of H's estate.

S will take 1/2 of all of H's estate. Since H and B died at the same time, B is treated as

though she predeceased H, therefore, H did not have a spouse at the time of his death. H,

however, had another child D.

No exception to the omitted child rule applies to these facts.

5) The rights of Bob under the 2001 Will:

The facts state that Bob was to be given 10,000 dollars under the terms of the 2001 will.

However, upon the death of H, H's will had tlie 10,000 dollar figure crossed out and 25,000

dollars was handwritten in H's hand above the 10,000 dollar fiture. Next to the 25,000 dollar

figure, H hand wrote, "Have fun. Henry 10/10/02."

Bob will argue that he should not receive the 10,000 dollars but rather the 2002 writing

on the will constitutes a holographic codicil and therefore he should be given 25,000 dollars

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upon H's death.

Holographic Codicil:

A codicil must follow all the same formation rules of a will. However, a will or codicil may

be created when the testator 1) has a present testamentary intent, 2) signs the will, and 3) all

material portions of the will are in his own handwriting. A codicl merely amends or modifies an

existing will.

The facts state that H crossed out the 10,000 figure and wrote 25,000 dollars over the

top of it in his own handwriting. Additionally, H wrote in his own handwriting "Henry." This may

be considered a valid signature. Signatures do not have to appear at the bottom of a page of

do not have be any particular marking. So long has it identifies the individual. It would help if

there were facts to demonstrate that H always signed his name has "Henry" Additionally, intent

may be shown by the fact that H crossed out the old portion and wrote in a new portion and

signed and dated it. There is no evidence to suggest that any portion of this codicil was

preprinted.

Bob may have a successful argument that the writing constitutes a holographic codicil.

Dependent Relative Revocation:

If the codicil is found to be invalid, one might argue that Bob's 10,000 dollar gift was

revoked by H's action of crossing out the figure. However, Bob would be able to successfully

argue that the revocation of the 10,000 figure was dependent on the validity of the gift of 25,000

figure. Therefore, H only intended to give Bob a larger gift, not to revoke his gift of 10,000

dollars all together.

At the very least, Bob will receive 10,000 dollars from the estate of H. However, it is likely that

the writing is a valid holographic codicil and will therefore receive the 25,000 dollars.

6) What are Betsy's rights:

The facts state that B and H married in 2007 after his 2001 will. B's estate may argue

that she is an omitted spouse since the will was created prior to their marriage and therefore

she should be able to take her intestate share. However, there are facts to show that B was not

an omitted spouse. Rather, H gave B a fully paid-up life insurance policy on his life, with death

benefits of 200,000 dollars. B was named the beneficiary. The gift card that accompanied the

policy stated in H's handwriting that "I want to makie sure you are fine should something

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happen to me. This policy is to ensure your well-being." Therefore, H made a gift toW of a life

insurance policy in lieu of including her in a will.

The writing may also be considered a holographic will. However, such an argument is

not necessary since B is named the beneficiary and would receive the interest upon H's death.

One might argue that since B and H died simultaneously, B is treated as though she

predeceased H. If this applies to life insurance policies then B would not receive any benefit .....----~T···>."'"'"

from the life insurance policy because h~r interest would have lapsed. However, the result may

be the same, since B's heirs would be a~le to take her place under the life insurance policy.

Simultaneous Death:

Where a husband and wife dies and the husband has a will, the 120 hour rule does not

apply. Therefore, an individual must merely show that they outlived the other spouse by clear

and convincing ·evidence in order to take their share. Since the facts state that H and W died in

a plane crash and there are no other facts to support that they did not die simultaneously, B's

estate will receive her share of the community property and none of H's separate property.

Therefore, 8 will recieve 50% of the stock and 50% of the Pay on death account for D's

benefit. These property interest and her own separate property will be inherited 100% by Sam.

Since the facts are silent as to whether B had a will the property goes by intestate succession to

her son Sam.

7) Heirs under the will

The facts state that under the 2001 will, if W was not living, the residue of H's estate

would go to his heirs presently existing. W is treated as though she died before H (see above)

therefore the heirs of H's estate will be Bob, Sam, and Denise and H's mom. Betsy is not an

heir because she died simultaneously with H. Therefore, if the property is divided by probate

code 240 S and D will take the residue of the estate equally. Swill therefore not be considered

omitted since he takes under the will1/2 anyway. If however, H's will is read to give his heirs

equal share of his residue of his estate, then his estate ':"'ill be divided amongst Mom, S, D, and

Bob equally. f 1 : i;i~ 1

8) Intestate succession:

If the will is found to be invalid for any reason, the property contained in the will will fall

into intestate succession rules. S will receive half of H's estate and D will recieve the other half

of H's estate. All other will substitutes would stand and the property in them would not pass by

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intestate succession.

Page 6 of 6

2)

Is the Will admissible to Probate?

Formal Will

In order for a formal will to be admissible to probate, the will must be written by a

person of sound mind with the requisite testamentary intent, signed by the testator and

properly witnessed.

Here, there are no facts which show that Tom lacked testamentary capacity at the time

of the Will, and the language of the Will seems to show that Tom understood that he

was creating a will to take effect in the event of his death. Thus, he had the requisite

capacity and intent.

Tom signed the Will and Fred signed it as a witness. In California, a formal will is only

properly witnessed where the testator signs the will in the presence of two witnesses,

who then also sign the Will knowing that the document they are witnessing is a Will.

Here, Fred was the only witness. Thus, the will was not properly executed.

Harmless Error Rule

However, there is a harmless error rule which permits an otherwise invalidly executed

Will to be treated as a Will where there is clear and convincing evidence that the

testator intended the document to be their will. Here, the letter that Tom wrote to Fred

states that he was "happy with the provisions of his 2002 Will" which tends to show that

Tom believed the document he prepared and signed in 2002 to be his Will. Thus, the

court will probably find that Tom intended this document to be his Will and thus, it

should be probated as his Will.

Incorporation by Reference

Another theory for admitting the Will to probate would be to argue that the 2002 Will

Page 1 of 6


was republished by the 2009 letter to Fred, which would qualify as a holographic will,

which incorporated the improperly witnessed will by reference.

A holographic will is a document which is created with the intent that it serve as the

testator's will, all material terms are in the testator's handwriting and it is signed. Here,

Tom handwrote a letter to Fred, which stated that he was leaving Fred a bank account

so he could take care of Steve if he should die and confirming that he was otherwise

happy with the provisions of the 2002 Will. Fred would likely argue that this document

was written to take effect in the event of Tom's death, so it had the requisite

testamentary intent, and it provided the material terms in Tom's handwriting (i.e. bank

account, and reference to 2002 Will). Finally the letter was signed and dated by Tom.

Thus, this letter should qualify as a holographic will.

A conditional will, that is a will that is created to be effective upon the occurance will be

effective as a will only if the condition occurs, unless the purported condition was

merely an impetus to create a will intended to be generally valid. Here, the Will was

written because Tom was "worried about an upcoming plane ride." He was then killed

in a plane crash. Thus, if the court were to construe this letter as a conditional will, the

condition for the will, ie. dying in a plane crash, was satisfied.

A Will may incorporate a document by reference if it is in existence at the time the Will

is executed and is identified within the Will and is sufficiently described so the

document being incorporated may be identified. Here, the letter references the 2002

Will which was improperly executed. Since there are no facts which state that there

were any other documents that might be confused with the 2002 Will, this is likely

reasonably described to permit identification and since it was in existence at the time

the holographic will was executed, the otherwise d_E.;lfeg1i_y_§L\6'-H!. may be admitted into

probate as incorporated by the holographic codicil.

Is Fred disqualified from taking the gift of stock because he was an interested

witness?

Page 2 of6


An interested witness is a person who signs the Will as a witness and also receives a

gift under the Will. A Will signed by an interested witness does not fail, but rather the

gift to the interested Witness must fail to the extent that it exceeds the intestate share

because it is presumed that the interested witness exerted undue influence, fraud,

coercion or duress. However, because the Will was not admitted to probate as a formal

yvill, but rather, incorporated by reference in the holographic Will, Fred will argue that he

should not be disqualified from accepting his gift of the stock as an interested witness

because he was not a witness to the holographic Will which incorporated the improperly

executed Will he signed. Further, in the absence of any other facts which suggest that

Fred acted with undue influence, fraud or duress, the court will likely find that Fred is

not disqualified as an interested witness, and should be entiteld to take his gift under

the Will.

Did the gift to Fred adeem because Tom no longer owns BigCo stock?

When the testator makes a specific gift, but then disposes of the property during their

lifetime so that it is no longer part of the estate';' the gift adeems. However, when the

gift was transferred without the intent to terminate the gift, the beneficiary may argue

that the gift may be traced to the proceeds of the specific gift, or that the transfer was

merely a change in form.

Here, Fred was bequeathed BigCo stock under the Will. However, at the time of Tom's

death, Tom did not own any BigCo stock, instead, he owned LargeCo stock. Thus, the

gift of BigCo stock adeemed since its no longer in the estate.

The residuary beneficiaries will argue that this transfer was made with the intent to

adeem the gift because Tom failed to make any changes to the provision of stock for

Fred because he wrote the letter to Fred after he sold the stock. Tom expressly stated

that he was otherwise happy with the provisions of his 2002 Will, which he is presumed

to know provided that Fred should receive stock that he no longer owned. If Tom had

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wanted to give Fred is LargeCo stock to Fred, he could have written that in the letter as

well. But he choose not to.

Thus, the court will likely find that since Tom actively sold the BigCo stock, which was a

voluntary transfer, this was not a change in form, which typically arises where there is a

corporate merger or reorganization.

Thus, the gift of stock to Fred likely adeemed and Fred will take nothing under the Will.

Is Fred entitled to the proceeds of the POD Account?

A pay on death account is a non-probate devise which transfers automatically to the

named beneficiary upon the death of the original account holder. It is revocable until

the death of the account holder. Here, Tom did not remove the funds of the POD

account, thus Fred takes this account.

Is Steve entitled to take an intestate share as an omitted child?

An omitted child is a child born after or unknown to the testator at the time the last

testamentary document was executed and was not provided for in the will. However,

an otherwise omitted child may not take if: (1) the testator intentionally excluded them

from taking under the will and that intent appears on the face of the Will; (2) the testator

provided a non-probate transfer that was intended to be in lieu of a testamentary gift; or

(3) the testator had one or more children and left all or substantially all their property to

the surviving parent of the omitted child.

Here, Tom received the letter about Steve before he executed his 2002 Will. However,

he responded that he doubted that he was Steve's father. Thus, Steve could argue that

he was an omitted child because Tom did not really "know" about him, because he did

not really understand that he was indeed Steve's father. However, the holographic Will

in 2009 is the last testamentary instrument that Tom executed, and it specific mentions

Steve and makes a specific provision for him by asking Fred to use the bank account to

"look after the kid, Steve." Thus, it appears that Steve was not really omitted, and even

Page 4 of 6


if Tom did not really know that Steve was his child, he expressly intended to not provide

for him under the will, or that the provision to Fred for Steve's benefit, was a transfer

intended in lieu of a testamentary gift.

Thus, the court will likely find that Steve was not really "unknown" to his father at the

time of the last testamentary devise, and that the express terms of the holographic Will

exempt him from taking as an omitted child. Thus, Steve is not an omitted child.

However, Steve may claim the benefits of the bank account as a beneficiary of a

testamentary trust.

Did the Holographic Will create a Testamentary Trust?

A trust is created where the testator complies with the provisions of executing a Will,

has the intent to make a trust, provides trust property, names a trustee (or one may be

appointed by the court), has a lawful trust purpose and names reasonably ascertainable

beneficiaries. ·

Here, Tom created a holographic will which stated that he was giving his bank account,

which presumably had money in it, thus there was trust property and a named Trustee.

The beneficiary is reasonably ascertainable because "the kid, Steve" which may or may

not be Tom's son, is reasoanably ascertainable because there are probably not too

many children that Tom may have fathered that he knew about, but was uncertain of

paternity. Finally, there is a valid trust purpose because the money is to "look after

Steve" which is a legitimate trust purpose.

Thus, the gift of the bank account, which may or may not be the POD account (its

unclear from the facts whether these are the same account), is to be held in trust by

Fred as trustee for the benefit of Steve.

Who is entitled to take the residuary?

Page 5 of6


The gift to "my brothers" is a class gift, which is subject to divestment as members are

added to the class. A class gift does not include predeceased persons who would

otherwise be qualified as a member of the class if the testator knows of the death of the

class member. Thus, Adam, who died before Tom wrote the gift "to my brothers" is not

included in the class of persons to take. Thus, Amy may not claim Adam's share under

the anti-lapse statute.

However, since Ben died after this gift, Betty may argue that she should take under the

anti-lapse statute. A gift to a predeceased beneficiary lapses. However, when the

beneficiary is kindred to the testator who leaves issue, the gift may go per capita to the

issue instead of lapsing.

Here, Ben, Tom's brother, died after the gift was written, but before the holographic will

was executed. THus, the court will likely find that the gift to him lapsed because Tom

could have redefined the class of "brothers" to include Betty. However, Tom did not do

this. Thus, it's unlikely that Betty will take under the anti-lapse statute.

Thus, the gift to brothers, will go to Charles entirely.

It is noteworthy that a gift to "brothers" may be deemed to violate the rule against

perpetuities since Tom could conceivably have more brothers after his death, however,

California has an wait-and-see method which will allow the gift to remain valid so long

as it vests within 90 years. Since it is highly unlikely that the class of brothers won't

close within 90 years, the gift to brothers is probably valid.

Page 6 of6

Wills and Trusts 2010 Final Exam Prof.Y. Ascher

Question #3

Teresa loved birds and visited the local Zoo's aviary daily. As a result of these visits, she became friendly with the Zoo janitor, Birdy. Birdy told Teresa that Teresa must have been a bird in her prior life and that's why she was able to understand the birds so well. Teresa was so thrilled by this revelation that she started wearing feathers in her hair daily, and changed her diet to mirror that of her favorite birds.

Birdy took Teresa to see his brother, Larry, a licensed Lawyer, to draft a Will. Larry asked Teresa about her family and Teresa said "The ones I loved are dead. Their kids are bums. I never see them. I don't even remember their names its been so long." Teresa told Lawyer she wanted to leave her estate to a Trust, which would provide funds to care for the birds at the Zoo, especially since she was sure she was going to be a bird in her next life and wanted to make sure she was well cared for. Teresa wanted Birdy to act as Trustee. The Trust was to last as long as the Zoo had birds. Ifthe Zoo were to close the aviary, the money was to go to the National Audubon Society, a public charity. Birdy was to be granted absolute discretion as Trustee. Larry prepared the Will as requested and it was properly executed and witnessed. Larry also prepared a Power of Attorney pursuant to Teresa's request, naming Birdy as her Agent.

Teresa died later that year from injuries sustained from a car crash. She was driving too fast, as was her habit, and crashed. Teresa's nephew, Ned. Jr., the son of her deceased brother, Ned, was in the car with her. He died the next day.

Teresa was survived by three nieces (N-1; N-2 and N-3), the children of Teresa's deceased sister. She was also survived by one grandnephew, Nolan, Ned. Jr.'s son. In addition to Nolan, Ned Jr. was survived by a spouse, Sally. They all lived in the same neighborhood as Teresa, but visited infrequently after the death of Teresa's siblings. Among Teresa's papers was a valid Will dated 20 years earlier in which Teresa had left her estate "in equal shares to my sister and my brother. I love my family".

a. You represent Birdy. He wants to know if he can use the Trust money to build himself a new work shed at the Zoo, complete with internet, a sleeping cot and a small kitchen. He explains that this way he can just live at the zoo, which will allow him to take better care of the birds. What do you advise him with respect to this proposal in particular and his role as Trustee?

b. You represent the National Audubon Society, what arguments would you make in support of your client's claim to the estate? What other advice would you give your client?

c. Your represent the nieces and Nolan. What do you argue on their behalf? What interest could they claim? Sally wants you to represent her as well. Should you take such an engagement? Explain.

d. The Zoo has announced that they can no longer afford to maintain the aviary .as it is too expensive, and want the Trust to support a new gorilla habitat. You represent the Zoo, what arguments do you make in support of your client's interest in the Trust.

4

3}

A Advice to Birdy (B)

I would first explain to B his responsibilities as trustee, as follows:

A trustee, upon acceptance of the trust, enters into a fiduciary relationship with the trust and its

beneficiaries. A trustee must administer the trust according to the provisions in the trust, and

must act as a prudent person, using any special skills posessed. Even though the trust grants

him "absolute discretion" he is not permitted to abuse that discretion and breach his duty of

care or loyalty. 0\DOo\ v

Here, Theresa (T) made clear that she wanted the trust to provide funds to care for the birds at

the zoo. Therefore, B administer the trust with this in the forefront of his mind.

A trustee has a duty of loyalty to the trust and its beneficiaries. This requires the trustee to

avoid conficts of interest, and adverse trusts. Here, if B were to use trust funds to guild himself

a new work shed, complete with internet , sleeping cot, etc, this would appear to be a clear

conflict of interest. He would be directly benefiting from the trust, which is not permitted . ........ ~ .. ~-'---~-----'_ .... ..,~-··-'""'·

A trustee also has a duty of impartiality, to treat all beneficiaries equally, including those with life

interest and remainder beneficiaries. Here, the remainder/contingent beneficiary is the National

Audobon Society. However, it could be argued that, until the condition is met, Bowes them no

duty to be concerned with any benefit that may result in their favor.

A trustee also has a duty to make the trust productive, to preserve, defend, and separate trust

assets, to follow the prudent investor rule (diversify, manage, and invest as would a prudent

investor). Here, using the money to benefit himself may appear wasteful, and would violate his

duty to invest the assets and make them productive. Further, he should be careful not to mingle

his own money with the trust assets.

If B is found in breach of his duty as trustee, he could be liable for loss to the trust, any profit

made by B, or profit that would have accrued to the trust but for the breach.

Page 1 of?


I would recommend that he not use the money as he is suggesting. He should also consider

speaking with a professional investor (ok to delegate in this regard so long as proper selection

and supervision is maintained).

B. National Audobon Society (Society)

As th~ Society has only a contingent remainder, they may not have a cause of action. However,

if they do, they could argue breach of trustee duties as discussed above, and allege waste of

trust assets. They could also assert a claim to recover damages (also discussed above) and to

have B removed as trustee on grounds of breach.

C. Neices and Nolan (N)

N could argue the the will was the product an insane delusion, or undue influence, as follows:

In order to execute a valid will, a testator must be at least 18 years old, have testamentary

capacity, and have present intent to make a particular insturment her will. To have

testamentary capacity, the testator must 1) understand that she is making a will, 2) understand

the extent of her property, and 3) know the natural objects of her bounty, ie those who will be

affected by her will.

Here, there is nothing to suggest that T did not have testamentary capacity, which is a low

standard to satisfy. She appears to understand her assets, and she discusses her family, and

how she does not like them. She likely has sufficient capacity to make a will.

Insane Delusion

An insane delusion is defined as 1) a false belief, 2) that is the product of a sick mind, 3) there

is no evidence to support the belief, and 4) the belief materially affected the will, ie but for the

insane belief, the testator would not have made such a devise.

Page 2 of 7


Here, the facts state that T believes she is going to be a bird in her next life, she started

wearing feathers in her hair daily, and she changed her diet to mirreo that of her favorite birds.

However, although, eccentric, this woud not likely qualify as an insane delusion. Many people

believe in reincarnation, etc. This would not qualify as an insane delusion.

Undue Influence

Any will or revocation is invalid to the extent that it was procured by undue influence. Undue

influence is coercion that deprives a testator of her free will. It can be established in three

ways: 1) prima facie case, 2) common law presumption, and 3) by statute (PC 21350).

Under prima facie, undue influence is established where 1) the testator was suceptible to undue

influence, 2) the alleged wrongdoer had opportunity to exert undue influence, 3) and had

disosition to exert undue influence, and 4) the devise appeared unnatural.

Under common law presumption, a presumption of undue influece arises where 1) there was a

confidential relationship, 2) the alleged wrongdoer actively participated in the execution of the

will, and 3) the devise appears unnatural.

Under PC 21350, a rebuttable presumption of undue influence arised where 1) the beneficary

drafted the will (or related by family or business to drafter), 2) the beneficary was in a fiduciary

relationship with the drafter and transcribed the instrument or caused it to be transcribed ( or

was related by family or business to such a person), or 3) the beneficary was a caretaker for a

dependent adult testator (includes those 65 years of age or older, or those aged 18-64 who

have a physical or mental impairment that restricts their ability to carry out normal activites or

protect him/her self).

There are several exceptions to PC 21350, including 1) where drafer is related to the testator,

2) a certificate of independent review is obtained, 3) clear and convincing evidend that the

provision/insrument was not the product of undue influence (not available to drafter), 4) fulld

disclosure and prior court approval, 5) not executed in CA, and 6) gife $3K or less and value of

estate over $1 OOK.

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Here the first two methods described above would likely not apply as the devise does not

appear unnatural. The facts state that the family she ioves are dead, and "their kids are bums".

Further, ther is nothing to suggest that Birdy was especially susceptible to undue influence, etc.

PC 2130 may apply as Larry drafted the will, and he is related to Birdy, a beneficiary under the

will. However, a trustee is normally not considered a beneificary under a will. The only

"benefit" that birdy was to recieve was as trustee.

Rule Against Perpetuities

C could argue that the trust violates the rule against perpetuities, because it may not vest more

than 21 years after a life in being. The zoo may continue caring for birds for decades to come,

so who knows whent he society's interest may vest, if ever. However, the court could take a

wait and see approach. Further, this could qualify as a chartiable trust, so the RAP woudl not ~~--------.·---·····---"

apply, as follows:

Anti-lapse

If the trust failed, it would create a resulting trust in favor ofT's estate. The original will (20

years ago) would remain in force. That will leaves her estate "in equal shares to my sister and

brother."

If the beneficiary of a will predeceases the testator, the gift normally lapses (fails). However, if

the predeceased beneficiary is kindred of the testator (or the spouse's kindred, not including the

spouse) then the antillapse statute applies and the gift passes to the issue of the predeceased

beneficiary, in the manner described in PC 240. The anti lapse statute also applies to class

gifts, except to a member of the class who is dead before the will is executed and the testator is

aware of this fact.

As the brother and sister qualify as kindred (but predeceased the testator), the antillapse

statute would apply, as follows: \ ... ·~alf Gf the estate would be passed to Ned's issue, the other

half would be passed down to the s'istef's issue. The result would be: 1/2 to Nolan, and 1/2 to

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(N1, N2, and N3) !!. 1.' ''

·J '7· il '--. :., \ ,,

d. Gorilla Habitiat

It could be aruged that this was a charitable Trust, and that the doctrine of cy press should

apply.

- .~· .

A charitable trust is an irrevocable trust who has a charity as a beneficiary. They differ from

private trusts in that 1) the require a charitable purpose, 2) the do not require acertainable

beneficiaries, and 3) the rules against perpetuity do not apply.

Further, in charitable trusts, the doctrine of cypress may apply. Under cypress, if a trust

purpose becomes illegal, impractacle, or impossible, and the court can identify a general

charitable purpose, it may modify the trust to benefit an alternative that is as near as possible to

that purpose.

Here, the fact state that T wanted to provide funds for the care of the birds at the zoo,

especially because she thought she was going to be a bird in her next life. This would be a

valid charitable purpose, as it provides a benefit for society and care of animals in the (public?)

zoo. The zoo could argue that T's charitable purpose was to care for animals at the zoo in

general, and that gorillas are also in the zoo, so by modifing the trust to benefit the gorillas the

court would be furthering her general charitable purpose.

However, it could also be argued that T made clear that she wanted to provide for birds

specifically. She alsos provided specifically that if the zoo wer to close the aviary, the money

was to go ot the National Audobon Society.

The zoo would lose this argument, and cy pres would not be applied.

NOTE: if the trust failed, it would create a resulting trust in favor ofT's estate. The original will

(20 years ago) would remain in force. That will leaves her estate "in equal shares to my sister

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and brother."

As the brother and sister qualify as kindred, the antillapse statute would apply, as follows:

Anti-lapse

If the beneficiary of a will predeceases the testator, the gift normally lapses (fails). However, if

the predeceased beneficiary is kindred of the testator (or the spouse's kindred, not including the

spouse) then the antillapse statute applies and the gift passes to the issue of the predeceased

beneficiary, in the manner described in PC 240. The anti lapse statute also applies to class

gifts, except to a member of the class who is dead before the will is executed and the testator is

aware of this fact.

In doing so, it would pass 1/2 to Nolan, and 1/2 to (N1, N2, and N3)

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wills and trusts final examination · wills and trusts final examination fall 2010 prof. y. ascher...

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