WILLS OUTLINE I. IS THERE A WILL? a. Intestacy: If there is no will or the will is deemed invalid, or not all the property is disposed of, the

Transcription

1 WILLS OUTLINE I. IS THERE A WILL? a. Intestacy: If there is no will or the will is deemed invalid, or not all the property is disposed of, the remaining property will pass by intestacy under statutory scheme. i. Community Property: All community property, including quasi-community property will pass to the surviving spouse. Separate Property: If the decedent is survived by issue, ½ of the separate property goes to the surviving spouse and ½ to the surviving issue. If the decedent is only survived by parents or issues of parents, ¾ of separate property goes to surviving spouse and ¼ goes to parents 1. No Surviving Spouse: If there is no surviving spouse, the entire estate will be distributed to the heirs, parents, issue of parents, grandparents, issue of grandparents, laughing heirs. 2. No Surviving Heirs: If no one is eligible to take under the intestacy statute, property escheats to the state. 3. Distribution Scheme: Washington distributes per capita at each generation and per stirpes thereafter. Probate Property: Probate property is property that passes under the decedent s will or by intestacy. Probate is the default rule UNLESS there is some specific designation that takes property out of the probate process. Non-Probate Property: Non-Probate property is property passing under an instrument other than a will that does not involve a court proceeding, but is made in accordance with the terms of a contract or trust or deed. Nonprobate property includes (1) joint tenancy property (both real and personal), (2) life insurance, (3) contracts with payable on death provisions, and (4) interests in trusts. b. Determining the Relationship i. Spouse: State law determines marital status True Relatives: True relative do not include social relatives (in-laws) Half-Blood: Relatives of the half-blood are treated the same as relatives of the whole blood. Step-Children: Step-children are only recognized to avoid escheat to the state. v. Adoption: Adopted children are treated the same as biological children. All other relatives presumptively embrace the adoption (unless outwardly reject) and therefore an adopted child can take through intestacy from other adoptive relations. Adoptive child cannot inherit from biological parent, unless the parent dies before the adoption and then child can inherit from deceased parent s relatives. vi. Posthumous Heirs: The presumption is life begins at conception and therefore child born after death may still inherit from deceased parent. v Involuntary Termination of Parental Rights: The terminated parent may not inherit from the child, but the child may inherit from the parent (unless the child is subsequently adopted). c. Slayer s Statute: A person who materially participated in the intentional slaying of another based on a preponderance of the evidence is barred from inheriting from the deceased. d. Uniform Simultaneous Death Act: The Act applies where there is insufficient evidence of order of death and provides that each decedent is presumed to have predeceased the other for purposes of the other s estate (each is presumed survivor for the purposes of his own estate). II. WAS THE WILL VALIDLY EXECUTED? a. Testator Capacity: In order for the will be valid, the testator must be 18 years old and be able to (1) recognize the type and extent of his property owned, (2) recognize the objects of his bounty, and (3) understand the testamentary significance of the will. Capacity is presumed from proper execution and measured at the time of execution. i. Current Testamentary Intent: The testator must have current testamentary intent to determine who is to own the property upon death. Future promises or mere expectancies are not binding. b. Lack of Testamentary Capacity: A will be defeated for lack of testamentary intent. i. Insane Delusion: A will may be set aside if the testator was overcome by an insane delusion that is contrary to all reason and evidence which affects the terms of the will. Undue Influence: A will may be set aside if the testator was susceptible and unduly influenced or coerced by a person in a position to influence and but for the undue influence, the testator would not have made the same will. Fraud: A will may be set aside if it is the result of fraud. Fraud occurs where the testator was deceived on a material term and but for the fraud, the testator would not have made the same will. Mistake (does not defeat intent): Generally, a court will not correct a mistake. However, alternative remedies are available including (1) scrivener s error, substantial compliance, (3) judicial dispensing power, (4) rules of evidence/interpretation, (5) constructive trust, and (6) malpractice suit against drafting attorney. c. Execution Requirements: The statute provides that a will must be (1) in writing, (2) signed by the testator, and (3) attested by two or more competent witnesses. Each witness must see the testator sign the will or receive the testator s acknowledge that the will is his own. i. Proxy Signature: A proxy may sign in the testator s presence, at the testator s direction and must include the proxy s own signature. Attestation: Two competent witnesses must sign in the testator s, but not each others, presence. An interested witness may sign, but may raise the rebuttable presumption of undue influence or fraud if contested. Publication: Publication of the will is not required; the witnesses need not know the document is a will. Date: The date is not legally required; however, is important for subsequent documents.

2 v. Self-Proving Affidavit: To avoid the difficulty in locating the witnesses at probate, the witnesses can sign a selfproving affidavit, in front of a notary, attesting to their own signatures. d. Other Types of Wills i. Holographic Wills: Holographic wills are not allowed in Washington, but may be imported from another state. The material provisions of the holographic will must be handwritten by the testator, but need not be witnessed. Pre-Printed Forms: Pre-printed wills are specifically allowed in Washington. Oral: Generally, oral wills are not recognized, but may apply in limited situations. Negative Disinheritance: Negative disinheritance is not recognized in Washington, the testator must affirmatively dispose of all property. III. HAS THE WILL BEEN AMENDED OR REVOKED? a. Amendment/Revocation by Testator: A will may be revoked (or partially revoked) by physical act of destruction coupled with intent to revoke or by subsequent testamentary instrument. Revocation of a will returns the testator to intestacy while revocation of a codicil returns to the language of the original will. i. Partial Revocation: Washington allows partial revocation by physical act unless it is merely a new disposition without testamentary formalities. Cancellation of a portion of the will appearing on the face of the will, made with the intent to revoke such portion, operates as a revocation of that portion if the remainder standing alone can be understood. Striking a section for the purpose of making an alternate disposition is ineffectual as a revocation of any part of the will. Codicil: A codicil, a separate writing to amend the will, must be executed with testamentary formalities. Republication of Will by Codicil: If a codicil restates the unchanged terms of the previous will, its execution has a collateral effect of re-dating the will to the date of the codicil. Increase or Decrease of Bequests: An increased bequest requires a new subsequent document (not a mere act of insertion). However, a decreased bequest may be made by subsequent document or by physical act. v. Doctrine of Dependent Relative Revocation: The DRR provides that if the testator would not have revoked or partially revoked a previous will had he known that the subsequent will was invalid, the court will pretend that the original will was not revoked. vi. Revival: Generally, revival is disfavored, however, if a subsequent will is revoked, the original will not be revived unless it was the intent of the testator. If a codicil is revoked, the original will is revived. v Missing or Lost Will: A will that is presumed lost will be valid and extrinsic evidence may be used. v Prepayment of Expectancies: Where a lifetime transfer by a decedent was intended as a prepayment of an expectancy, the prepayment will nullify the beneficiary s rights by intestacy or under the will. Every gratuitous inter vivos transfer is deemed to be an absolute gift and not a prepayment unless shown to be a prepayment. b. Amendment/Revocation by Operation of Law i. Omitted Spouse: A spouse acquired after the execution of a will may inherit up to the intestate share unless waived, intentionally omitted or alternatively provided for. Gifts to others will be revoked as needed to accommodate inheritance to the spouse. Omitted Child: A child born after the execution of a will may inherit up to the intestate share unless intentionally omitted or substantially all the estate is left to the child s surviving parent. Gifts to other will be revoked to accommodate inheritance rights of omitted children. Dissolution/Divorce/Annulment: A spouse is automatically removed from the will; however subsequent gifts to the former spouse are permitted. Encumbrance of Property: Subsequent encumbrance of property does not revoke bequest, however, the beneficiary takes subject to the encumbrance. IV. ARE THERE ANY SUBSTANTIVE LIMITATIONS ON THE DISTRIBUTION OF PROPERTY BY WILL? a. Creditors: Debts to third party creditors must be satisfied prior to distribution under a will. b. Protection of Spouse i. Community Property: A deceased spouse may only distribute his ½ share of the community property Spousal Election (Conditional Gift): A surviving spouse may elect to take the stated gift or to stand on community property rights and take against the will. Forced Share: A surviving spouse is entitled to the statutory mandatory spousal minimum which never exceeds 50% of the entire estate including community property. Waiver of Rights: A surviving spouse cannot waive child support may waive inheritance rights. c. Homestead/Other Family Protections: The Homestead Allowance allows protection from creditors for up to $40,000 for the home. If no homestead protection from creditors is claimed, the spouse can claim an award in lieu of the homestead equal to the amount allowed as a homestead exemption, from community or separate property. d. Contracts Relating to Wills: The law of wills generally overrides the law of contracts, but contractual remedies may be available for improper wills. However, statutory Community Property Agreements will be enforced against the will. e. Will Substitute: Any property distributed by substituted means (trusts, inter vivos gifts, sales, community property, contracts with payable on death provisions, property law rights) do NOT pass by will. V. HOW TO INTERPRET THE WILL? a. Integration: A written document, present at the execution of the will and intended to be part of the will, will be admitted into probate.

3 b. Incorporation by Reference: A written document in existence when the will was executed, referred to in the will and intended to be part of the will, will be admitted into probate. c. Separate List Disposing of Tangible Personalty: A signed (or handwritten) written document, referred to in the will, but neither present nor inexistence at execution, will be allowed to distribute the testator s tangible personal property. This does not apply to cash. d. Acts of Independent Significance: A will leaving significant portions blank, to be completed later is allowed unless the sole purpose of entering the information is testamentary. e. Rules of Construction i. Plain Meaning Rule: The probate court will use the unambiguous plain meaning of the document unless there is a personal usage that clarifies the testator s intent. Extrinsic Evidence: The probate court will allow extrinsic evidence only to resolve ambiguities, but not to contradict plain meaning. Evidentiary Rules: The probate court will construe the evidence in light most favorable to uphold the will and to favor testate taker above non-testate takers. For inconsistent provisions, the last in time governs. VI. HOW SHOULD THE ESTATE BE DISTRIBUTED? a. Classification of Gift/Order of Distribution: Gifts are distributed by their classification: specific, demonstrative, general, residuary, intestacy. i. Specific: A specific gift is an entitlement to a particular piece of property Demonstrative: A demonstrative gift is a hybrid of both general and specific gifts. General: A general gift is a pecuniary gift which can be satisfied by transfer of any asset. Residuary: The residuary include all property not transferred as a specific or general gift. v. Intestacy: All property that is not disposed of by a valid will go through intestacy. b. Abatement: When the assets are insufficient for all distributions, the decedent s wishes must first be honored. However, if no abatement provisions are specified in will, the gifts abate in reverse order of distribution. The property must be abated proportionally within category. c. Accretions of Property: When the value of the property increases, the beneficiaries are entitled to increased value of property unless the will specifically limits a fixed value or quantity. d. Ademption: When specific property is unavailable for distribution, the gift is adeemed. No substituted property or value is allowed with the exception for insurance payments, remaining payment on installment sales contracts, condemnation or eminent domain proceeds, or unless the testator indicates otherwise. e. Lapse: Generally, if a specific beneficiary predeceases the beneficiary, the gift falls to the residuary. However, if a gift to a predeceased beneficiary is not conditioned on survival, the anti-lapse statute will allow children of predeceased beneficiary to take if the decedent and the predeceased beneficiary have a kindred relationship. If predeceased beneficiary is a residual beneficiary, the gift to pass to the children of the deceased by representation. f. Disclaimer: A beneficiary may disclaim a gift in writing, delivered to personal representative of the estate within 9 months of creation of the interest if the beneficiary did not accept any interim benefits. VII. HOW SHOULD THE ESTATE BE ADMINISTERED? a. Appointment of Personal Representative: If a will does not designate a personal representative, the surviving spouse, may petition to be appointed. The surviving spouse is always entitled to administer the community property. i. Duties of Personal Representative: The personal representative must collect and maintain decedent s assets. The personal representative must get court authorization to sell, exchange, mortgage, or lease estate property, or to borrow money on the general credit of the estate. Fiduciary Duties: A personal representative is a fiduciary and owes a duty of complete honesty, loyalty, and due care to the estate, the beneficiaries, and the creditors. b. Non-Intervention Powers: Any personal representative acting under nonintervention powers may mortgage, encumber, lease, sell, exchange, and convey the real and personal property of the decedent, and borrow money on the general credit of the estate, without order of the court and without notice, approval, or confirmation of the court. A personal representative must give notice of intent to apply for nonintervention powers 10 days before a hearing on a petition to the decedent s heirs and parties who are requested notice. c. Will Contest: A will may be contested in whole or in part. A contestant has 4 months after the admission of the will to probate or contest their claim. He must have standing (financial interest in the outcome of the will) and grounds (dispute will validity) to challenge. The burden of proof is on the contestant bringing the action. i. Dead Man s Statute: Interested parties may not testify about any transaction with, or statements made by, a deceased person when an adverse party in the lawsuit is a personal representative or successor of the deceased. d. No Contest Clauses: No contest clauses are generally enforceable despite public policy concerns. However, if the challenger prevails, the will is invalid. e. Small Estates: Estate containing less than $60,000 of personalty (non real property) can be processed through probate in a streamlined manner. f. Jurisdiction: The superior court has jurisdiction over matters of probate and administration. g. Venue: Venue is proper in (1) the county where the decedent resided, (2) the decedent died, or (3) the property of a nonresident decedent is located.

4 TRUSTS OUTLINE I. CREATION OF TRUSTS: A trust is a fiduciary relationship which splits the ownership of property it encompasses to give legal title to the trustee and equitable title to the beneficiaries. a. Reasons for Trusts: Trusts may be created for any reason but often are used to avoid probate, retain control over property, allow for expert financial management, and for flexibility in future needs. b. Parties to the Trust i. Settlor: The settler forms the intent to create the trust and transfers the property to begin the trust. Trustee: The trustee holds legal title to the property and is charged with implementing the terms of the trust. Beneficiaries: The beneficiaries enjoy the benefits of trust property and have power to enforce the terms of the trust. One person may hold multiple roles, but if the same person holds all legal (sole trustee) and equitable (sole beneficiary) rights, the interests merge into direct ownership. II. CLASSIFICATION OF TRUSTS a. Revocability: A trust is presumed to be irrevocable and non-modifiable unless it specifically states that it is modifiable. b. Degree of Openness: A trust can be obvious (both trust and beneficiaries are known), secret (neither trust nor beneficiaries are known) in which extrinsic evidence may be relied on to prove existence, or semi-secret (trust is known but beneficiaries are unknown) which fails for lack of beneficiaries. c. Types of Distribution to Beneficiaries: Distributions to beneficiaries may be mandatory, discretionary, limited to ascertainable standards (support, education, medical needs) or by accumulation only (distribute at later fixed date). d. Rights of Beneficiary s Creditors: A spendthrift trust prevents a beneficiary from voluntarily or involuntarily transferring his interest in the trust. As a result, he cannot sell or give away his future interest and creditors cannot collect from the future interest. An exception applies to taxes and other governmental obligations, furnishers of necessaries, child support, spousal maintenance, and self-settled trusts. i. Special Purposes: Fund for special purposes including support, education, child support or spousal maintenance, medical needs, or structured settlements may be distributed. III. CREATION OF EXPRESS TRUST a. Creation of Trust: A trust is created when there is (1) a trustee, (2) a beneficiary, (3) trust property res, (4) intention on the part of a settlor to create a trust, and (5) a valid purpose. The SOF requires the trust be in writing if real property interests are included. Trust property passes outside probate. i. Intervivos Trust: An intervivos trust can be created by the transfer of property to another as trustee. The trustee takes legal title upon delivery of deed or upon delivery of manually transferable property. Testamentary Trust: A testamentary trust is created by a will complying with the Statute of Wills. The will must demonstrate an intent to create a trust, and name a trustee, beneficiary, trust property and purpose. Pour Over Wills: A pour over will pours assets into an existing inter vivos trust at the testator s death. b. Res (Corpus): The res must exist at the time of trust settlement and must be segregated and identifiable. The res may include property which is real, personal, tangible, intangible, current, or a future interest, but it must not be insubstantial. c. Delivery: Delivery requires placing the property beyond the settlor s control. However, it does not matter if holder is merely acting as bailee until a trustee can be determined. d. Trustee: To qualify as a trustee, a person must have an ability to hold legal title and ability to enter into a valid contract. e. Beneficiaries: Beneficiaries must be named or subject to identification; however, a reasonably definite class is a permitted beneficiary. f. Purpose: A trust may exist for any purpose which is not criminal, tortious, or contrary to public policy. IV. OTHER TYPES OF TRUSTS a. Charitable Trusts: To qualify as a charitable trust, the trust must be created for (1) relief of poverty, (2) advancement of religion or education, (3) promotion of health, or (4) governmental purposes. Under the doctrine of Cy Pres, a similar charitable beneficiary may be substituted where the named charitable beneficiary cannot take. Charitable trusts are an exception to the rule against perpetuities and may be perpetual. b. Spendthrift Trust: A discretionary trust is one in which the trustee is given discretion whether to apply or withhold payments of income or principal to a beneficiary. This discretion limits the extent of rights of the beneficiary to the amounts the trustee decides to grant to him. Before the trustee exercises discretion, the beneficiaries interest is not assignable and cannot be seized by creditors. c. Honorary Trusts: An honorary trust is neither a charitable trust nor a private trust and is generally a trust for the care of animals. d. Resulting Trusts: A resulting trust is created at the failure or termination of an express trust. i. Purchase Money Resulting Trust: A purchase money resulting trust is created where legal title is held by an innocent party; the holder will hold the property in trust until the paperwork is created to correct title. e. Constructive Trusts: To avoid unjust enrichment, the court will create a constructive trust. The trustee of the constructive trust must convey property to the rightful beneficiary and keep property safe and productive. V. MODIFICATION AND TERMINATION a. Trusts: A trust can be modified or terminated by the settlor, beneficiaries, RAP, trust terms, the court, and changed circumstances. i. By Settlor: A settlor may modify, revoke, or terminate the trust only if that power has been specifically retained.

5 By Beneficiaries: Beneficiaries may modify, revoke, or terminate the trust only if there is unanimous consent of current and potential beneficiaries and it would not frustrate a material purpose of the trust. By Trust Terms: The terms of the trust may provide for modification, revocation, or termination. By Court: A court may terminate a trust if its purpose is accomplished, impossible, or impracticable. v. By Rule Against Perpetuities: WA retains the common law rule against perpetuities, but allows a 150 year wait and see in which interests held in trust may vest or fail without violating the rule against perpetuities. vi. Changed Circumstances: A trust will terminate if it no longer meets the requirements of trust (lack of beneficiaries or corpus) or if its purpose becomes unacceptable (changes in criminal law, tort law, or concepts of public policy). b. Trustees: A trustee may be terminated if she loses her capacity to serve, she breaches a specific duty, and there is extreme friction with beneficiaries or by trust terms. A trustee may not resign without court permission once accepting position. c. Beneficiaries: The rights of beneficiaries are limited by spendthrift restraints, discretionary provisions, bona fide creditors, or the by the terms of the trust itself. A beneficiary may disclaim rights, in whole or in part, at any time. VI. ADMINISTRATION OF THE TRUST a. Powers of Trustee: A trust has general powers of management, investment and distribution. The power to borrow is specifically authorized by Washington Statute. b. Fiduciary Duties of Trustee: The trustee has the fiduciary duties of care, loyalty, preserve and make trust assets productive, and duty to inform. i. Duty of Care: A trustee is held to a reasonably prudent person standards as applied in context. Duty of Loyalty: The trustee has a duty of loyalty to each beneficiary which strictly prohibits express or indirect self-dealing even where the transaction benefits the trust. Prohibition of Commingling: A trustee has a duty to keep trust assets segregated from all other assets. Prohibition of Delegation: A trust may not assign discretionary duties, but may assign administrative duties if exercises diligence in selection, training, and supervision of administrative personnel. v. Duty to Preserve and Make Trust Assets Productive: A trustee has a duty to preserve and make trust assets productive, by acting as a prudent investor, diversifying investments, and by insuring tangible assets. vi. Duty to Convey Title: A trustee has a duty to convey title if held improperly. c. Liabilities: A trustee is personally liable to beneficiaries for direct and consequential damages (including lost profits or interest) caused by breach of duty, but is not personally liable to 3 rd parties (non-beneficiaries) unless the trustee fails to disclose that he is a trustee. d. Accounting: Washington has adopted the Uniform Principal and Income Act which grants allocation and adjustment powers to the trustee in regards to investment decisions. VII. TRUSTS AS WILL SUBSTITUTES: Where property is owned in trust, it must not be distributed under the terms of a decedent s will or intestacy law. The trust terms control distribution of trust assets.