Trust and Estates

Document that passes property upon death
(deals with the disposition of property)

Allowing a person to have wide latitude to control the disposition of their property at death
- controling the living
- used to incentives people to act a certain way by receiving property

Restictions must be reasonable restictions
- fact sensitive (case-by-case)

Violates public policy
(wills can be voided on public policy grounds)

Dying with a will

Dying without a will

Catches all property that is not disposed explicitly
Ex: "the entire remaining balance"

1: Allows property that is gained (future proeprty) after the drafting of the will to be included
2: Not efficent to list everything
3: Not everyone knows absoultey everything they own

Acquire the property after death

Split
1. Some jx say PAP must follow/ pass through intestacy
2. Uniform Probate Code/ other jx allow residuary clause to devise of property acquired by the estate after the testator's death to pass under the will

Split
Majority: duty is owed to intended beneficiaries bc the foreseeability of harm to their interests allows for an exception to the general privity rule
Minority: privity of contract is required for a duty to be owed and a malpractice suit to be brought

1. Draft an engagement letter/ waiver of conflicts of interest when joint representing people to clearly law out the boundaries for decision or not disclosing information

Sufficient Evidence Test:
1. when there is no sufficient evidence who died first, treat them as they both predeceased each other and let the property go wherever it's suppose to land
2. when there is sufficient evidence that A survived B, A will inherit the property as intended

Heir or Devisee must survive by 120 hours/ 5 days to be considered to survive and inherit property

The state; through the state legislators (they go with what the testator would have wanted if they woulld have thought about it (do what maj of people would want if they were to die w/o will)

Split in JX
1. Inherit ONLY from adoptive parents and relatives (adoption severs biological/legal connection)
2. Inherit from BOTH biological and adoptive parents & relatives
3. Inherit from BOTH adoptive relatives & also from genetic relatives IF the child is adopted by a step-parent

Split JX
1: Some JX will follow the will as stated and allow adopted adullt to inherit
2: Some JX say strategic adult adoption for purposes of forcing inheritance are void

adoption by estoppel for purposes of intestacy (a child who hasn't been legally adopted can be considered an adopted child for inheritance purposes

Split JX
1: Some JX says there must be consent and formal adoption (consent of biological parent or court order terminating parental rights before someone can legally adopt
2: Some JX say if formal adoption does not occur then allow for equitable adoption to be established by court (not a bright line rule, look at circumstances and factors in the case)

Conceived before but born after father's death

Look to see if it is in the child's best interest/ advantage to be treated as a being from the time of conception rather than time of birth; must show with adequate evidence that the child and the dead parent have a genetic relationship; and that the dead parent consented to conceive child AND intent by deceased to provide support to child
(look at the state laws when dealing with this; most JX have time limit on when child can be born)

Split JX
1: No inheritance at all, based on equitable principles
a- some JX differentiate between M1 and M2 (involuntary or voluntary murder)
2: Inherit as usual, courts reasoned that this would impose another punishment on the person that is not prescribed by statute and would violate the constitution and its provision against corruption of blood
3: Constructive Trust, the legal title passes to slayer, but he is compelled as a constructive trustee

Split JX
1: compelled to pass to heirs of decedent (kind of like no inheritance at all)
2: others allow slayer to pass to their heirs as if they died and did not recieve it at all

Writing + Signature + attestation (witnesses; some jx say at least 2 others say 3, some will allow notary instead)

Signature provide a presumption that a person reviewed and approved of contents
(signature can be a mark, cross, abbreviation, X, nick-name, just needs to be some sort of proper identification of who signed the will. (we allow this because we do not want to deprive people of creating a will)

Split JX
UPC Approach: conscious presence is not required at all, and witness do not have to sign in the testator's presence
Conscious Presence Test: a witness is in the "presense" of the testator, if the testator, through sight, hearing, or general consciousness of events comprehends that the wintess is in the act of signing
Line of Sight: a witness is in the "presense" of a testator ONLY if the testator is capable of seeing the witness in the act of signing

Identical Wills disposing of property in the same manner (typically for couples) then they execute the wring will (so they sign each others wills instead of their own)

Efficiency (time and money) and they trust lawyer

Split JX
1: Will Probate & Re-Write, honor intent and comes closer to what the testators intent was
2: Will NOT Probate or Re-Write, strict complaince with will act, sets a standard to follow

Document where both parties are disposing of property together
Single document where couple decides to dispose of property together

Time, Money, Availability of Legal Services

Maybe not easy to read because could be tangled intent

There is clear and convincing evidence that the testator intended it to be their will (harmless error rule)

Clear and Convincing evidence that the document was intended to be a will (intended to dispose of property upon death)
The deceased must have reviewed the document to show they had intent for it to be their will

falls between beyond a reasonable doubt and prepnderance of the evidence. it is required because it is a big deal to do away with the will formalities act

Split JX
Some allow HER
Some do not allow HER

addition/supplement that explains/modifies/ revokes Will or part of Will

Can be vaild (even though there are concerns)

Testators handwritting (material provisons), testamentary intent, signature (does not need to be a formal signature just needs to be signed)
Split JX
some allow and some do not allow holographic wills

JX where there are issues with legal service access

Cautionary and Channeling function

-make sure its really what the person wants
- shows making a will is serious
- shows intent
- prevents fraud

Cautionary
Channeling
Evidentiary
Protective

Testator fills in the blanks

Allow for privacy and easy to use

Drafting of a will needs skill and execution

Split JX
1: Stict complaince so no not enforceable
2: Some will allow if the JX allows for use of harmless error or holographic will as long as there is enough handwriting from the testators
A: what counts as enough handwriting?
- some jx only look at handwritten portions alone must be enough to discern intent to create holographic will OR
- others pre-printed terms read in context with handwritten terms to evidence intent

Anytime up until death

All states allow revocation of a will by
1: a subsequent writing executed with the Wills act formalities
a. draft doc that says revoking the prvious will (revocation clause)
b. draft a new will that dispose of property (last in time wins)
2: a physical act (destroying, obliterating, burning, etc.)
a. intention act with intent of revoking will
b. can be done by the testator or by someone the testator told them to do it

Split
1: Some say act has to touch the words of the will because it makes it clearere it was a revocatory act (burning the edge not enough)
2: Some say its enough if it just touches the document itself (burning edges okay here)

Conscious presense and also need the intent to revoke the will

To make sure we are honoring a testators intent, conscious presence is determined by JX so look at law

If a will is not found amoung the decedents belongings, presumed to be revoked
Is a Rebuttable Presumption; burden on proponent of probating Will, show letters, requests for storage etc.

To prevent fraud and show intent

A holographic will to revoke another holographic will or even a normal will

Efficient and saves time and allows to amend will without drafting a while new one

That are disinterested witness (cocern with witnesses receiving gifts under the will they were a witness too)
Purge Statute could kick in and not let property go to the witness who was interested in the will (benefiting from the will)

Recognized in all JX
- Recovation is ineffectice if the testator would not have revoked the will but-for the mistaken belief
- Old Will would still be effective if the testator only revoked on the mistaken belief that the new Will was effective. If evidence shows that testator did not want Will, DRR will not apply.

All papers in present at the time of execution of the Will and were intended to be part of the Will are treated as part of the Will
a: can apply where both documents are held together with paperclips, staples, numbered, anythinng indicating both documents go together

Allows for a writing that was in existence, but not present at the time of execution, and that was not itself executed with testamentary formalities to be absorbed into the testators will

If you amend a will by codicil the date of the will becomes the date of when the codicil was dated
(so will 1/23/14 codicil on 5/23/15 then the will is said to be a dated the later)

Because it is your property so you get to do what you wish with it

If the wills are a contract (example: mirror image will)

Mutual Assent, Consideration, Offer, and Acceptance

- Because you made the document in the first place so that shows capacity
- People have the right to dispose of their property in ways they want
- Judicial Efficiency
-If witnesses believed that the person making the will did not have the capacity they would have stoped them or not put their name on the will

The person fighting the will bears the burden

Applied when objectors argue “lack of general testamentary intent” due to mental illness, physical infirmity, senile dementia, and general insanity
• the nature and extent of his or her property
• the natural objects of his or her bounty
• the disposition that he or she is making of that property
• capable of relating these elements to one another and forming an orderly desire regarding disposition of the property

Applied when testator in possession of his general facilities, sufferes from delusions to which the testator adheres against all evidence and reason to the contrary
Must
- had and adhered to delusion
- against all reason
- materially affected disposition of property

i. Meets Cunningham without Insane Delusion
ii. Non-Material Insane delusion does not necessarily defeat testamentary intent, but still must meetCunningham

Overcomes the idea/intent of the testator rather than allowing them to dispose of their property as they wish

Start with presumption that there is NO undue influence, then burden shifts to person contesting the Will to overcome that presumption

Legislatures
- they make a guess of what someone would want if they thought about forming a will (do what we think as a society people ought to do with their property after death)
typically to relatives

Not a bright line test, fact sensitive
o unnatural disposition of property has been made
- means what we would not expect someone in that position to do
- do something strange; unexpected
o by a person susceptible to undue influence to the advantage of someone (mental status is very important for this element)
- vulnerability
- some sort of dependance
o with an opportunity to exercise under influence; and
o who in fact has used that opportunity to procure the contested disposition through improper means
- has to be the result of disposing of the property

People who would have benefited from the Will

DOCUMENT THINGS!!!!
Questions to Ask clients when drafting Wills:
1: will there be individuals hurt or upset by the disposition of this property?
- If a Will contestation is likely, draft statement in Will why they are doing the particular thing, include a No-Contest Clause, video the client discussing intent, tell people they are not getting anything, living probate if allowed in Jx.

Clause that states if a person challenges a Will and is unsuccessful, they get nothing

When undue influence crosses the line into coercion
- someone is given no alternative but to make a will of a certain way

Improper threat + overcomes will/intent of testator
(threat is usually financial or physical benefit of person coercing does not have to be tortious or criminal

Material misrepresentation of fact + scienter (evil intent) + reasonable reliance + causes disposition of property

o the existence of an expectancy (someone previously names in a will)
o intentional interference with the expectancy through tortious conduct
o causation; and
o damages

SPLIT
a. Half require that π exhaust probate remedies
b. Half allow claim regardless

Undue influence, duress, fraud
TC can be coupled with the abouve 3 claims too

o punish the person who committed the tort
o we want to make sure the property goes where the testator wanted it to go
o we value people making wills to dispose of their property how they want
o this tort comes into play where there is no other remedy
o this claim will go through a court of general jurisdiction not a probate court

No extrinsic evidence (only read within the 4 corners of the will)

Subject to two interpretations

extrinsic evidence may be used to understand clear the confusion

Major life event
typcially the best evidence of what someone wanted to happen when they die

used to resolve ambiguities, but the plain meaning of the words of the Will cannot be disturbed by evidence that the testator intended another meaning.
(gets the court closer to the goal of what the testator wanted (honor intent)

A way to help the court get to the goal of what the testator wanted (honor intent)

on its face

only manifests when terms apply to the facts

o we aren’t changing the will just trying to figure out the ambiguity (who is who)
o don’t have to cross something out or ignore something to make a decision

Split JX
a: some courts will allow extrinsic evidence with whatever type of ambiguity
b: some courts will draw a difference between latent and patent ambiguity; in which they only allow EE for latent ambiguity

o Equivocation- A description for which two or more persons or things fit exactly, or
o No exact fit- A description for which no person or thing fits exactly but two or more persons or things fit partially

Split JX
o No Reformation/ plain meaning Rule – court cannot reform a Will to correct a mistaken term to reflect what the testator intended. Only go with what is in document.
o Some courts will reform by removing ambiguities: Ex: removing a wrong address or wrong initial in a name (blue pencil approach)
o Some courts will reform/ rewrite documents to reflect testator’s intent. (reformation approach)

Split JX
- some allow to bring in all extrinsic evidence at the start
- some will only allow extrinsic evidence once they find ambiguity (then they will re-write the will)

SPLIT JX to what happens with property if one is predeceased
a. Residuary property divided among other residue beneficiaries (residue-of-a-residue)
b. Residuary Property passes through intestacy (no-residue-of-a-residue)

o clauses that give all the testators property to people
o include this clause to take care of all the other stuff that is not specifically named in the will

• acquire more property; not know what they might have so it gets a catch all to prevent things from going intestate
• tends to favor testator’s intent more
• helpful to the probate system by keeping property out of the intestacy system
• allows for an exchange

error in drafting with residuary clause then can cause property to go through intestate system if this is done wrong

two approaches
- if one of the beneficiary (fails/ passes away) then the other beneficiary gets it all
- if it fails then property goes to through the intestacy system

o substitute other beneficiaries
o if you discover that one of the beneficiary of the will has passed away (predeceased the testator) then have to go to that jx anti-lapse statute to see who gets the property next
- typically, the gift will lapse and not go to that beneficiary (because dead)
o normally ends up going to someone who is related to the intended beneficiary

Split JX
some will enforce the will as written and some will follow the anti-lapse statute

Attempt to honor the testators intent or closely doing so rather than dropping through the intestacy system

State precisely in the will that the anti-lapse staute WILL NOT apply (draft around it)

Gift to a group of people with some sort of ascertainable relationship
(ex: all living members of UT law class 2024)

o reflects the fact that things may change overtime and still allows you to reflect you intent
o allows one to give property to people who they might know all yet
o more efficient if giving to a large amount of people
- example: to all my children
o Risks with mis drafting a will is bad so class gifts allows to limit that
- example would be listing out every person

individuals with some similar characteristics gift to generic sum of people that the number is not known

Comes into play in circumstances where someone no longer owns the property that was left in the will

SPLIT JX
1. Historic Approach/ Identify Theory
• if no longer in the possession of the testator at their death then it goes extinct and the beneficiary gets nothing
• selling shows intent they did not want the person in the will to have it anymore
2. Intent Approach
• if property gone at time of estate, the beneficiary MAY be entitled to replacement value if they can show that is what the testator would have wanted and were not trying to extinguish the gift. (AKA they died in a sports car, obviously they didn’t mean to destroy it, but if they sell it, you have to prove that they still meant for you to get replacement value)
3. Middle Ground/ Modified Identity Approach
• if property is removed through INVOLUNTARY act of testator (destroy w/o knowledge, accident, stolen, POA distributed) the beneficiary gets value or replacement property
Ex: where property is sold by a guardian, or is destroyed contemporaneously with the death of the testator

1. intent by the settlor to create a trust
2. ascertainable beneficiaries who can enforce the trust; and
3. specific property, the res, to be held in trust
& If the trust is testamentary trust made by a will or a trust under a contract then need..
4. a writing may be required to satisfy the Wills Act of the Statute of Frauds

Testamentary Trust
Intervivos Trust

created by a will

Created during the life of the settlor

settlor = gives property to
trustee = takes legal title and is supposed to use the trust to the benefit of the beneficiary (owes fiduary duty to beneficiary)
beneficiary= takes equitable title of property

intent to convey property by a trust
intent to convey property for the benefit of another

one or more to whom a trustee owes fiduciary duties and who can call the trustee to enforce trust

Honorary trustee is not legally obligated (only morally) to carry out settlor’s stated purpose, but if they decline or neglects to do so, the property reverts to the settlor’s successors if someone complains or there may be abuse if no one complains
ex: you want someone to take care of your pet after you die

intent by settlor to create trust
in writing if for a pet
property

because you do not need an ascertainable beneficiary

pets are important to us and society recognizes that

Must prove by clear and convincing. generally permissible unless it is a testamentary trust, or created through a contract which then must be SOF

Trust that is not metioned in the will (no one other than the trustee knows about it)

Trust metioned in the will but not full informatin of it is in the will

- some jx do not enforce semi0secrete trust on the principal that the will act requires a writing, and its not fully in writing because it doesn’t identify the beneficiaries
- some jx do enforce it

avoid probate court this way
less time consuming and less expensive
keeps things private

it is revocable (you can revoke or amend anytime)

allows the settler to revoke, change, amend, etc

SPLIT JX
Traditional Rule: Can ONLY revoke or amend trust through specified method identified in Trust
Modern Rule: Revocable trust can be amended or revoked in any manner that clearly manifests the settlor’s intent to do so unless the trust instrument identifies exclusive(only) method

Yes, but if they want to do that they need to be very explicate about it

to change/ revoke the trust

At any point in time up until death (default rule)

Create exposer for assets

gain access to satisfy debts.
1.“It is against public policy to have an estate upon which a person can live but which they can not pay their debts”

idea is that if you have a will you pour your estate into the trust and might have other probate assets into the trust as well

because it is easier to change just one document (the pour over trust) than changing multiple documents if you want to change something

Rule for Wills: Default-revocation-on-divorce. Can expressly write around rule

Split JX
1. Revocation-on-Divorce: Divorce implies revocation of Trust if jurisdiction applies Will statutes to Trust.
2. Divorce does not imply revocation. Settlor must amend or revoke beneficiary

Two types
1. Term Life: coverage for a term, if you die in that term, your beneficiaries get paid (gambling) (lessens
2. Whole Life: savings plan resulting in asset that pays out at death (like a savings account)

the person will be named in the policy

because it’s a contact basically which are legally enforceable agreements
so its within the terms of the policy/ contract

because you have the right to contract and change a certain aspect of a contract

1. if the insurer waived the strict compliance and may be changed with their request
it’s their right to change
2. insurer has done everything to change the insurance but then died before the change was final/made
its close enough, everything has been done basically just the last step wasn’t
honors the insurers intent
3. insured literally could not comply with the requirements
tragic circumstances?
at least allows for someone in a dire circumstance to still make this change

o people create these to offer stability after their retirement
o contractual in nature
o sometimes they are given to beneficiary if there is any money left after the person who has the IRA

SPLIT JX
1. Yes – honor intent of change of beneficiary in Will
2. No –strict compliance with policy requirements- it is like a K

governs retirement plans (payable upon death assets)

So why would the government want to get involved here?
• people are living longer
• because old people vote and so the government wants to make sure they are taken care of because it is in their interest to protect them (so they get voted in again)

Sometimes
Pros
uniformity is a good thing
allow for orderly administration
Cons
stifles regulatory competition

Defined Contribution Plan (401k) – employer/employee funded
IRA – self funded retirement plan

1. Default Rule: Divorce revokes divorced beneficiary and gift is void
- Can be drafted around
B. For certain pension plans, this rule is preempted by ERISA

o another way property can be dispose upon death
Ex: joint account with right of survivorship (when one passes away the other gets what’s left)

the remaining value of the account goes to stated beneficiary (beneficiary does not have access during account owner’s life)

Sharing finances – both parties would have equal access to withdraw money during their lives

SPLIT JX
1.Presumption of a complete gift to other joint account party
a. Rebuttable with clear and convincing evidence
i. (because people are generally unaware and may execute a joint account on accident and intend to otherwise create a pay-on-death account, and not give the person access during life)
2. Presumption of complete gift is CONCLUSIVE (usually split equally)
3. UPC Approach- During their lifetime, each is entitled to the net contribution of each party - UNLESS there is clear and convincing evidence of a different intent.

between preponderance of the evidence and beyond a reasonable doubt

why have this standard?
- going to respect people can do what people want with their property
- because it is a JOINT account so that means you should of understood that the other person was going to have access to the funds as well
- not everyone knows exactly what these account means so want to give them a change to get their stuff back

agent/ attorney-in-fact is given written authorization to act on behalf of the principal. Their power ends on the incapacitation or death of the principle

court appoints someone to look over assets where a person becomes incapacitated

o event that someone becomes incapacitate they have someone who can take over for them
o durable is important here!!!
o allow a person to appoint a representative (agent) to take on their affairs if they become incapacitated

1. Delegable: agent does have ability to create revocable/inter vivos trust on principles behalf if allowed under DPA(not testamentary trusts because those are created through Wills)
a. Agent owes fiduciary duty to stated beneficiaries
2. Non delegable: agent does not have ability to create Will on principles behalf

Each spouse owns what they earn during marriage – helps ability to have free disposition of property

which means anything that is earned/ gained during the marriage is each other’s

Where spouse is disinherited or left out of Will, or portion of will left to spouse is less than 1/3, Elective Share kicks in and spouse gets up to1/3rd of assets (both spouses can use this)

Trust becomes part of the elective share rule where the trust was meant to avoid the elective share ruleT

Decedent intended to defraud spouse of their elective share. – some courts look to subjective intent while others look to objective intent

Whether decedent had an intent to transfer an interest in the property

Yes

Will allow the spouse who stayed at home to file for an elective share

- Partnership reason of marriage
- Support theory

Agreement between the spouses that states their assets are separate and they are waiving their rights to the elective share rule
- dictates distribution of property on divorce or death

Enter into the agreement freely and must have knowledge of the assets they are wavig their rights too

Just need to be on inquiry notice of what persons assets are, but good to have full disclosure

Split in JX:
1. MIN Louisiana Approach: Forced share available for children, cant purposefully disinherit children(Lambeff v. Farmers)
2. MAJ American Approach: Can disinherit child and child NOT entitled to elective share

General Rule: after-born children are allowed to claim forced share equal to intestate share UNLESS
1. It appears (clearly and unequivocal in Will) that omission was intentional
2. Testator has one or more children before Will and Estate gives assets to spouse (i.e. trickle-down to child)
3. Child is provided for outside of Will (Trusts)

Split JX
1. MAJ: unintentionally omitted children statutes do not apply to non-probate transfers (trusts ect.)
2. MIN: unintentionally omitted children statutes do apply to non-probate transfers. (Ex: Statute states it applies to “testamentary instruments” rather than just Wills.)

• Presumption is that an omitted spouse can file for a share when the will is created before marriage, typically get the share (1/2 typically or more) as if the person would have died intestate (a default rule)
Rebuttable: Show that person intended to keep future spouse from inheriting from will “I don’t want future spouses to get my shit in this Will” Or if they have spouse access to other assets whether they intended the previous will to be available to them.

Duty not to self-deal or steal
- requirement to act with undivided loyalty in service settlor’s intent and provide for best interests of beneficiaries

Applied when trustee undertakes transaction that involves a conflict between trustees’ fiduciary duties and personal interests.– executor is on both sides of transaction
i. When an trustee SELF DEALS courts have no inquiry = bad motive assumed = invalidate transfer for breach of fiduciary duty

Allowed to self-deal if
a. settlor authorized the conflict in terms of trust
b. beneficiaries consented w/ full disclosure
c. trustee obtained judicial approval

Trustee, Spouses of Trustee, and sometimes expanded to Trustee's family members

Gives/ creates incentices for the trustee not to get out of line; so used as a tool to get the trustee place into their place

All Trustees are responsible for each other’s actions (collective duty). Cannot turn blind eye to other trustees’ breaches. Must act as a reasonably prudent person.

Damages are compensatory – breacher only owes difference in value vs what value self-dealer paid

requirement that you be thoughtful in how you conduct role as trustee
- reasonable prudent person standard
- broad umbrella term
-entails different duties under

Duty to inquire as to the assets, financial needs of beneficiaries, and other circumstanses

Duty to diversify the risk (stock or concentration of value in limited buildings/property). First, honor settlor intent, but absent clear direction to re-investments stocks, duty to diversity in a manner similar to how a Prudent Investor would diversify.

Holds that is you have a diversified basket of investments, you have best chance of consistent returns with minimal risk (rather than concentrating wealth in one thing, smooth out risk in the event things go wrong)

Special circumstances that would serve the trust better by not diversifying OR trust explicitly says to NOT diversify

Requires trustee to treat beneficiaries equally

Where you have present beneficiaries (income - receiving income of property of trust) and remainder beneficiaries (receive property of trust when trust terminates)
Different incentives between both
o Income: want property that generates income
o Remainder : want property that generates in value

North Dakota Approach
Traditional Rule (Re-Partition Approach)
Uni-Trust Approach

Adjust between inncome beneficiaries and remainder beneficiaries and deal with it
- Issues with diversification
- Discretion to trustee

Trustee can adjust the levels between income and principal once they buy assets if they made a wrong choice and it was not impartial. (Ex: Take increase in income to buy more stocks for principle to balance interests.)

Allow for trustees to opt in to this approach that provides a specific formula that allocates between income beneficiaries and remainder beneficiaries

duty to provide in good faith information to beneficiaries that enable them to enforce their rights under the trust

The settlor includes a clause saying disclousre is not necessary (exclupatory clause)
BUT Duty of Good Faith still applies – must disclose enough information to beneficiaries to be able to exercise their rights under the trust. (Backdoor to reintroduce all duties that settlor tried to exempt).

Exculpatory Clause (gets rid of duties)

Disclosure upon request
Non- Routine Disclosure (must do it in timely fashion)
Periodic Disclosure (half year basis)

if you are a trustee and making statement to beneficiary and it is really not that way, and you really could have figured out that it is not that way then you can be in trouble
- however, if you give good effort it can be a defense

Ensures that assets go to the correct place (combines with duty to inqurie)

Trust that prevents beneficiary cannot alienate their interest in trust (assign interest to someone else) and creditors from accessing the beneficiaries’ interest.

Split JX
1. Jx- Created by Default- spendthrift trust exists (Should still include language)
2. Jx- Need explicit Language creating Spendthrift trust (don’t need magic word, but include explanation)

1. Legislative Exceptions:
a. Child/spousal support;
b. Judgment for creditor providing services for Trust (creditors maintaining trust)
c. Claim by United States if US Code provides spendthrift trusts cant restrict access.
2. Tort Judgments:
a. Only Georgia allows Tort Judgments to reach assets in Spendthrift Trusts.
b. All jurisdictions reject tort exception to invade Trust to satisfy judgments.

- allow for a slow way of moving property
- it is not the beneficiary property so it cannot be reached
- a way of entrenching wealth

Settlor creates a trust where they start off being the trustee and then end up being the settlor of the trust too (settlor is also beneficiary)
- Shilds assets from imposition of liability/ judgement

A scheme where people are promised investment returns but in relaity there are no investments (payours are coming from the new investors)

Serve to remove Trustee/settlor/ beneficiary and appoint successor if Trustee is under duress/pressure – beneficiary shielded from judgment

Can instruct Trustee on how to manage -- more robust powers than beneficiary -- maintains a check on Trustee to avoid the trustee from stealing trust assets. But they cannot access assets of trust

Split in JX if they are allowed:
a. TYPICALLY, cannot shield assets from creditors by placing assets in a trust for own benefit
b. MIN of US juris allow (to draw business)

(Clafin Doctrine) Beneficiaries petition for medication
1. A trust can be modified if all beneficiaries agree, but ONLY if doing so is NOT contrary to the material purpose of the Settlor.

a. Spendthrift trust (Material purpose left to be accomplished is the restraint of alienation)
b. Beneficiary gets principal at a specified age (Material purpose left to be accomplished is waiting till they reach that age)
c. Discretionary trust (Material purpose left to be accomplished is the settlor’s intent for discretion to remain vested in trustee)
d. Support Trust (Material purpose left to be accomplished is to maintain support for beneficiaries for a period of time)

1. Unforeseen circumstances not known to settlor (after Trust signed)
2. Mod/termination will further material provisions – intent still honored

Created for an individual with some sort of special needs (mental or physical)

Clafin Doctrine or
Equitable Deviation Doctrine

Where Trustee has DISCRETIONARY POWER over distribution of Trust, and uses that power to distribute the STILL RELEVANT trust property into a new trust with updated provisions, leaving behind the SEDIMENT of the first trust’s STALE provisions

i. SPLIT JX –
1. Some JX do not allow decanting
2. If JX allows decanting (decanting statutes), Trustee must:
a. have ABSOLUTE DISCRETION over Trust to pour out corpus of trust
b. NOTIFY beneficiaries
c. keep SAME beneficiaries- cant add new beneficiaries
d. CANNOT CONTRADICT original Trust

For removal need...
i. CONSENT by all qualified beneficiaries;
ii. BEST INTERESTS of all beneficiaries;
iii. NOT INCONSISTENT with material purpose of trust;
iv. suitable replacement AVAILABLE and WILLING to serve

When a person makes a gift in support of a charitable purpose
(same as private trust but must have charitable purpose)

Can be
a. Relief of POVERTY
b. Advancement of EDUCATION/RELIGION
c. Promotion of HEALTH/GOV’T/MUNICIPAL purposes
d. Other purposes BENEFICIAL TO COMMUNITY (Interpreted narrowly)
i. # of people who benefit is a typical consideration

indefinitely (not subject to rule against perpetuities)

Because society views them as valuable

Cy Pres Doctrine allows modifcation of the terms of the trust (change to a new purpose that's as near as possible to the donor's intent/ consistent with thir intent) ONLY if the traditional purpose becomes 1. impossible 2. impracticable 3. illegal

Because the settlor cannot anticipate everything

SPLIT JX
i. Some jx allow Attorney General & Settlor (settlors’ estate) (the OG settlor can say once they die they reserve the right to another person) have standing to enforce
ii. Some jx allow Attorney General has standing to enforce (Rationale: rep for the people, efficient – concerned with political aims)

They represent the public; they can take care of busniess for the public; they were voted to represent the public

o budgets (may not dedicate to enforcing a public trust)
o they don’t want to upset the board and wealthy people and then not get elected again

It is their property so they should be allowed to reserve this right to make sure once they are gone public trust stilll doing what they intended

(aka settlor) Creates power of appointment in trust (power to change beneficiaries of trust (aka give property away)
The settlor will say who the donee is in their trust/ will/ etc.

This is the person the donor (settlor) choice to be the donee
- person holds power to determine where the property goes

Donee can give the property to anyone; including themself

Donee can only give the property to others (cannnot give to themself)

No magic words
BUT there must be manifested intent to make that person the donee
(look at the intent and the language in the document)

NO

Split JX
Some allow creditors to reach property
Some still do not allow creditors to reach property

Because if the donee can give the property to themself they most likley will so we will treat it as if it is theirs

It is really the settlors property
because it really isnt in the donee's hand bc they have not exercise their power

Right given by settlor (donor) to another individual to make the determination of the disposition of property at some later point

Donor (settlor) designated in the settlor's trust

Donee; person who holds power to determines where the property goes

The person who ends up with the property (the person who the donee give the property too)

a. General Power of Appointment
i. Always permissible (as long as consistent with donor intent)
b. Non-General Power of Appointment
i. SPLIT
1. Some JX allow appointment through further trusts (as long as not trust to yourself)
2. Some JX DO NOT allow (frustrates donor intent)

includes anything that involves the acquisition of wealth

Exceptions to this GR
- ascertainable standard
• if there are certain conditions /limitations on your discretion
• related to health, maintenance, … ?
- five-or-five
• 5% or \$5,000 whatever is greater can collect and not be included (won’t be taxed)

depends on how much control the settlor retainso Revocability
- Revocable trust – included, because settlor still has power to alter the corpus
i. Irrevocable trust – not included, because settlor has relinquished power over the corpus
- Power of appointment (Estate of Vissering v. Commissioner)
i. General – included
ii. Specific – not included

Subject to taxes if less then all good