Trusts and Wills: Estate Planning Essentials

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What distinguishes an inter vivos trust from a testamentary trust?

An inter vivos trust is created during the settlor's lifetime, while a testamentary trust is established through the settlor's will and becomes effective only after their death.

What is the primary advantage of using trusts over wills in estate planning?

Trusts help avoid probate, providing a more efficient and private transfer of assets than wills.

What are the requirements for creating a legally valid written trust for real property?

A written trust must be signed by the settlor to satisfy the Statute of Frauds for real property.

How do revocable trusts differ from irrevocable trusts?

Revocable trusts can be altered or terminated by the settlor during their lifetime, while irrevocable trusts generally cannot be changed once established. Signup and view all the answers

What is a pet trust and when does it terminate?

A pet trust provides for the care of animals and terminates upon the death of the last animal covered by the trust. Signup and view all the answers

What conditions must be met for a surviving spouse's share to withstand scrutiny under public policy?

The surviving spouse's share must not be unconstitutional and must not violate public policy. Signup and view all the answers

In the case of Shapira v. Union National Bank, how did the court view the condition of marrying within a particular faith?

The court ruled that requiring a devisee to marry within a particular faith is a reasonable restriction that does not violate public policy or the Fourteenth Amendment. Signup and view all the answers

What are the primary duties of an estate planning attorney when creating a will?

An estate planning attorney must be competent, maintain client confidentiality, identify their client, and identify any conflicts of interest. Signup and view all the answers

How do incentive trusts function in terms of supporting beneficiaries?

Incentive trusts provide financial support to beneficiaries while placing conditions on distributions based on their actions, like pursuing education. Signup and view all the answers

What does the concept of privity of contract imply in the context of wills and trusts?

Privity of contract allows the parties involved in the contract to sue each other but prevents third parties from doing so. Signup and view all the answers

What is a constructive trust and its purpose in the context of a probated will?

A constructive trust is imposed to protect the testator's freedom of disposition by preventing unjust enrichment from fraud. Signup and view all the answers

What are the two types of fraud related to wills, and how do they differ?

The two types of fraud are fraud in the execution, where the contents of the document are misrepresented, and fraud in the inducement, which influences the testator's decision-making. Signup and view all the answers

What are the key elements required to establish tortious interference with an expectancy?

The key elements include the existence of an expectancy, intentional interference through tortious conduct, causation, and damages. Signup and view all the answers

How does the Schilling v. Herrera case impact the concept of tortious interference with an expectancy?

The case establishes that tortious conduct resulting in loss of an expectancy can be actionable, even if it prevents seeking relief in probate court. Signup and view all the answers

What principle is expressed by the '4 Corners of the Document' rule in will construction?

The principle states that the meaning of a will should be determined solely by the text within the four corners of the document, without considering external evidence. Signup and view all the answers

What does the Plain Meaning Rule entail in the construction of a will?

The Plain Meaning Rule allows for extrinsic evidence to clarify ambiguities but mandates the application of the document's plain language when there is no ambiguity. Signup and view all the answers

Why is the 'No Reformation' rule significant in will construction?

The 'No Reformation' rule prohibits courts from modifying a will to correct mistakes, thereby enforcing the testator's exact language and intent. Signup and view all the answers

What must a claimant do before pursuing a tortious interference claim regarding an expectancy?

The claimant must first avail themselves of probate court remedies before seeking relief in tort for interference with an expectancy. Signup and view all the answers

Study Notes

Wills, Trusts, & Estates - Introduction

Governing laws include the Uniform Probate Code, Uniform Trust Code, and South Carolina Probate Code.
Terminology:
- Testate: dying with a will (the person who receives the property is the devisee).
- Intestate: dying without a will (the person who receives the property is an heir).
- Partial intestacy: dying with a will that doesn't cover the entire estate; heirs are involved.
- Testator/testatrix: the deceased person who made a will.
- Personal representative/executor/administrator: the person who manages the deceased's estate.
- Probate court: a judicial process in order to ensure correct distribution of assets and pay debts; estate settlement.
- Devise: a testamentary gift of real or personal property.
- Devisee: the person named in the will to receive a devise.
- Heirs: those entitled to inherit in intestacy (no will).
Types of estates include:
- Probate estates (which are settled in probate court).
- Nonprobate property (which are transferred outside of probate court, such as trusts and life insurance).
Probate is required to:
- Evidence all transfers.
- Protect creditors.
Costs to probate an estate include court fees and professional fees (lawyers and appraisers).
Creditors and nonclaim statutes govern how long creditors have to file claims against an estate.

Wills, Formalties, & Forms

Execution of Wills: formalities required to make a will are:
- Writing
- Signature
- Attestation
Statutory formalities for wills vary by state. Wills Act (1837) requirements.
UPC section requirements for formal will execution.
SCPC requirements for will execution.
Attestation clauses (a clause that recites the will was executed properly) in wills
Order of signing: testator then witnesses.

Revocation of Wills

Wills can be revoked in various ways:
- By a subsequent writing (a later will or codicil, expressly or by inconsistency).
- By a physical act (destruction, tearing, cancellation, or obliteration).
Issues with revocation include:
- When the will was last seen/possessed by the testator, then it is presumed the testator revoked the will.
- Revocation by subsequent will.
- Rules regarding revocation of partial wills
Doctrine of dependent relative revocation (DDR): a revocation is invalid if done on the basis of a mistaken belief about the validity of a subsequent instrument or a prior instrument.
Revocation by operation of law (such as divorce or the birth of a child).

Capacity and Contest

Capacity to make a will: the testator must be of sound mind to properly make a will (understand the nature of the act, the property, the beneficiaries, and the desires).
Insane delusions: a false belief about reality despite evidence to the contrary, If the will was made as a result of such delusions, the will is considered invalid.
Undue influence: improper pressure that leads a testator to make a will they wouldn’t have made otherwise
Duress: forcing or coercing a testator through physical harm
Fraud in the execution: intentionally misleading a testator about a will’s contents
Fraud in the inducement: misleading a testator about matters outside the contents of the will, but indirectly motivated them to execute the will.
Tortious Interference with an Expectancy: a civil action asserting that someone interfered with the testator’s right to an inheritance.
Construction of a will: interpreting the terms and provisions of a will

Death of a Beneficiary & Antilapse Statutes

Antilapse statutes: substitute beneficiaries for a deceased beneficiary, usually if the deceased is a relative of the testator
Types of gifts: include specific, demonstrative, and general.
Provisions for what happens to a gift in a will if the beneficiary pre-deceases the testator
Class gift vs individual gift: if the beneficiaries are described as a group or class, the surviving class members divide the gift (class gift).

Trusts – Characteristics and Creation

Types of trusts:
- Inter Vivos (living): created during a person's lifetime, often as a will substitute
- Testamentary: created by a person's will, to take effect after death
Revocable vs. Irrevocable Trusts: revocable trusts are amendable, while irrevocable trusts are permanent.
Essential elements of trusts include: intent, ascertainable beneficiaries, trust property, and trustee(s) with duties.
Beneficiaries: who the trust is for, the named individuals.
Charitable Trusts
Honorary Trusts

Fiduciary Administration

Trustee duties
- Loyalty: trustee acts solely in the beneficiaries' best interest.
- Prudence: trustee exercises reasonable care, skill, and caution in managing trust assets.
- Impartiality: equally considerate of all beneficiaries' interests.
- Accounting: accurate recordkeeping of trust activities.

Nonprobate Transfers

Examples of non-probate transfers:
- Joint ownership (with survivorship rights)
- Revocable inter vivos trusts
- Contracts (life insurance, annuities)
- Retirement benefits and accounts
Considerations of nonprobate transfers in context of a Will.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on trusts and wills in estate planning. This quiz covers key distinctions between inter vivos and testamentary trusts, the advantages of trusts over wills, and various legal requirements for creating a trust. Explore topics such as revocable vs irrevocable trusts and the unique conditions related to estate planning.