Wills and Trusts

1
Wills and Trusts

• Professor Jenkins

2
In Terrorem Clause

• A beneficiary shall forfeit his bequest under
  the will if he contests the validity of the
  will.
• Rule Is valid in Texas, but will not apply to an
  attack on the will that is based on reasonable
  grounds and instituted in good faith.

3
Property Destruction Orders Under the Will

• Court Will
• Weigh social utility of destruction against loss
  to society of valuable resource.
• Weigh motivation of testator.

4
Probate Process

• Probate or administration of estate of living
  person-VOID.
• Probate of one believed to be dead proved by
  circumstantial evidence

• 4 year statute of limitations (unless proof that
  party was not in default-muniment of title only)
• Probate of Lost Will
• Date of execution
• Executor

5
Proof Required

• Person is deceased.
• 4 years have not elapsed since date of death.
• Court has jurisdiction and venue.
• Person applying for letters is qualified.

6
Venue

• First sought in primary or domiciliary
  jurisdiction (where decedent was domiciled at
  time of death).

7
Intestacy- Statutes of Descent and Distribution

• Section 45-Community Property Disposition of
  Whole Community

8
Real Estate

• Married-No Kids -
• All TO SS
• Married W/Kids of Surviving Spouse-
• ALL TO SS
• Married-Kids not Kids of Surviving Spouse-
• 1/2 SS 1/2 KIDS

9
Other Property

• Married-No Kids-
• ALL TO SS
• Married W/Kids of Surviving Spouse-
• ALL TO SS
• Married Kids not Kids of Surviving Spouse-
• ½ SS ½ Kids

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Separate Property

• Probate Section 38(a)

11
Real Estate

• Unmarried-W/Kids
• To Kids equally per stirpes
• Unmarried-No Kids
• ½ to MOM ½ to DAD (or brothers and sisters in
  place)

12
Other Property

• Unmarried W/Kids
• To Kids equally per stirpes
• Unmarried No Kids
• ½ to MOM ½ to DAD

13
Real Estate

• Married w/ Kids

1/3 SS for life
2/3 to kids equally
14
Real Estate

• Married No Kids

¼ to MOM
½ to SS
¼ to DAD
15
Other Property

• Married W/Kids

1/3 SS
2/3 to Kids Equally
16
Other Property

• Married-No Kids

ALL TO SS
17
Half Blood

• Section 41

S Half 1/5
B, D Whole 2/5, 2/5
A (Decedent)
18
Will Execution-Section 57

• Who may execute?
• One who is over 18 years (or married or a member
  of the armed forces).
• Of sound mind

19
Sound Mind-Capacity Test
20
Testator Must Know . . .

• Nature Extent of his/her property.
• Persons who are natural objects of her bounty.
• The disposition being made.
• How these elements relate to form an orderly plan
  for distribution.
• These only set the stage

21
Testator must have mind memory relevant to all
the thingsANDMust understand the significance
of her acts!
22
Relate To Time Of Execution
Direct Bearing on Testamentary Act
Other Factors
ACTS
23
Insane Delusion

• Delusion- false conception of reality
• Insane Delusion- false conception of reality to
  which testator adheres against all reason and
  evidence to the contrary

24
Execution by Interested WitnessSection
62Purging Statute

• A bequest to subscribing witness shall not be
  void if his testimony proving the will is
  corroborated by
• ONE OR MORE DISINTERESTED and CREDIBLE PERSONS.
• Anyone present of execution.

25
Section 61

• If no corroboration, and intestacy occurs
  interested subscribing witness takes.
• LESSER OF WILL OR INTESTATE SHARE.

26
Will RevocationIntent Capacity
RequiredSection 63

• By subsequent
• Will
• Codicil
• Declaration in writing, executed with like
  formalities
• By T
• Destroying
• Canceling

Or causing it to be done in his presence
27
DRRDoctrine of Dependent Relative Revocation
Revival

• Allows court to disregard a revocation based on a
  mistake of law or fact.
• TEXAS
• No Revival of a Revoked Will
• JURISDICTION

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SIMILAR PROVISIONS
WILL 1 10,000 to A Gold watch to B House to
C 5,000 to D 3,000 to E Residuary to X
WILL 2 15,000 to A Gold watch to B House to
C Residuary to X
29

• IN TEXAS, IF T DESTROYS WILL 2 THINKING HE IS
  REVIVING WILL 1, COURT WILL REVIVE WILL 2
  UNDER DRR.

30
NO partial revocation by physical act in Texas If
will is not found Presumption of revocation by
physical act.
31
Integration

• Asks
• Which pages present _at_ the time of signing
  comprise Ts duly executed will?
• Look for
• internal continuity
• staples.

32
Republication By Codicil

• An implied restatement or rewriting of the
  language of a valid will as of the date of the
  codicil.

33
Incorporation By Reference

• Applies only when instruments that NEVER HAD
  testamentary life are incorporated into a will
  and given TESTAMENTARY EFFECT
• 1. Will must refer to writing IN EXISTENCE with
  reasonable certainty.
• 2. Will description corresponds to description
  and was the one intended by T.

34
A Devise of ContentsSection 58 (d) (1)

• Does mean tangible, personal property
• Does not include tangibles, choses in action,
  titled personal property represented by a
  certificate of ownership requires a formal title
  transfer.
• Caveat One must expect to find item in such a
  location.

35
Example

• WILL STATES I leave the contents of my iron
  chest to Mary.
• At death, the chest contains
• Passbook with 5,000 showing on deposit
• 5,000
• Automobile title to antique Mercedes Benz
• Diamond tiara worth 1,000,000

36
Joint Will

• The wills of 2 or more individuals in one
  instrument

37
Reciprocal Wills

• Separate reciprocal wills which mirror each other.

38
Mutual Wills

• Joint or reciprocal wills based on a contract
  between testators.

39
Contractual Wills

• Two Types
• Contract Not Revoke
• Contract To Will
• TX Section 59 A
• State a contracts exists
• Contain material provisions of the contract
• (Contract may be incorporated by reference into
  the will if all elements are met)

40
BASIS OF CONTRACT

• Survivor will not revoke
• Contract Law Applies
• Then Wills Law Applies
• Remedy Constructive Trust

41
Ambiguities
Latent Does not appear on face of instrument.
Patent Appears on face of instrument.
Extrinsic Evidence freely received to determine
intent.
42
Ambiguities

• WILL
• I leave 6,000 to my nephew Ben.

• WILL
• I leave my beach home in Kemah as follows
• 25 to Ben
• 25 to Jerry
• 50 to Bartles
• 25 to James

There are 2 nephews named Ben.
43
TRUST

• A fiduciary relationship in which one person is
  the holder of legal title to property subject to
  an equitable obligation to keep or use the
  property for the benefit of another.

44
SETTLOR

• Trustor
• Donor
• Grantor

45
RES

• TRUST PROPERTY
• SUBJECT MATTER
• CORPUS
• PRINCIPAL

46
TRUSTEE (legal title)

• FOR
• BENEFICIARY (Equitable Title)
• Cestui Que Trust

47
Res
RES
Settlor
Trustee
For benefit of
Beneficiary
48
Requirement to Create Valid Private Trust

• 1. Expression of Intent
• 2. At least one beneficiary
• 3. Property interest in existence or
  ascertainable

49
A TRUST WILL NOT FAIL FOR WANT OF TRUSTEE THE
COURT WILL APPOINT ONE
50
Delivery

• Constructive- gives donee means of obtaining the
  object (e.g. a Key)
• Symbolic- gives donee something symbolic of the
  actual object (e.g. written instrument)
• When manual delivery is difficult or impractical

51
Resulting Trust

• Arises by an operation of law where an express
  trust FAILS or makes an incomplete disposition.
• Outcome?
• Takes res back to settlor or settlors estate

52
Power of Appointment

• The right (power) to select (appoint) within
  prescribed limits who shall receive an interest
  in property or how various interests in property
  shall be allocated.
• Permits one to dispose of property while
  postponing or giving to another the authority of
  disposition.

53
W
House to H to leave at his death to one or more
of 4 children. If he fails to direct, then to A.
I leave my house to H with power of appointment
under his will.
54
W
W
Tee to choose among my nephews.
Tee at his discretion.
Semi-secret trust-invalid
Power of Appt.
55
Oral Intervivos Trusts of Land are Invalid

• Restatement
• Rule where the owner of an interest in land
  transfers it inter vivos to another, but no
  memorandum properly evidencing intent to create a
  trust is signed as required by SOF, and the
  transferee refuses to perform the trust,
  transferee holds the interest upon the
  constructive trust for the transferor if the
  transferee at the time of the transfer was in a
  confidential relation to the transferor.

56
Elements to Impose Constructive TRUST
Confidential relationship Deed by Donor Oral
Agreement to Reconvey Real Property Unjust
Enrichment of Transferor
57
Secret Trust

• Will indicates no trust e.g. I leave 50,000 to
  Ben
• Remedy - constructive trust

58
Semi-Secret Trust

• Will describes a trust but no terms
• Result VOID
• e.g. I leave 50,000 to Ben to dispose as I
  have instructed.

Resulting trust
59
Termination

• Claffin Doctrine
• A trust may not be terminated by all of the
  beneficiaries if it would interfere with a
  material purpose of the settlor.

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Charitable Purposes

• A) Relief of Poverty
• B) Advancement of Education
• C) Advancement of Religion
• D) Promotion of Health
• E) Governmental or Municipal Purposes
• F) Other Purposes the Accomplishment of which is
  Beneficial to the Community.

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The Doctrine of Cy Pres

• Applies where the purpose of a trust has become
• Illegal
• Impossible
• Permanently impractical of performance

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Duty to Study Terms of Trust Instrument
63
Duty to Take Possession of Trust Property
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Duty to Defend Trust Against Attack
65
Duty To Separate
Separate Earmark
Trust Property
66
Duty to Make Trust Productive
67
Duty of Undivided Loyalty to Beneficiaries
68
Duty Not to Mingle Trust Funds With Trustees Own
Funds
69
Duty Not to Delegate
70
Duty of Impartiality in Dealing With Income
Beneficiary and Remaindermen
71
Duty to Retain Trust Documents and Vouchers and
Keep Records
72
Duty to Account to Beneficiaries