What is the doctrine of INTEGRATION (aka the Staple Rule)?
Restatement (Third) of Property §3.5 Integration of Multiple Pages Into Single Will
To be treated as part of a will, a page or other writing must be present when the will is executed and must be intended to be part of the will.
What is the doctrine of INCORPORATION BY REFERENCE?
UPC §2-510
A writing in existence when a will is executed may be incorporated by reference if the language of the will manifests this intent and describes the writing sufficiently to permit its identification. Neither the testator’s handwriting nor signature is required for incorporation.
External writing may be incorporated if:
- “In existence” at time of will execution
- Future writings cannot be incorporated
- But external writing does not need to be present at will execution - The will manifests intent to incorporate by reference
- The will clearly identifies the external writing [sometimes a matter of interpretation]
Unless contested, the external writing is usually not probated or a matter of public record.
What types of documents are most suitable for incorporation by reference rather than inclusion in the will?
- Contracts concerning succession
- Inter vivos trust
- Prenuptial agreement
- Divorce decree provisions relating to property settlement
What is a TANGIBLE PERSONAL PROPERTY LIST?
- Flexible option for disposing of tangible personal property
- TPP list:
- Must be signed by the testator, but witness attestation not required
- Must be referred to in will
- May be created and amended after will’s execution
- Very common in practice
- Exempts tangible personal property list from:
- “In existence” requirement under incorporation by reference doctrine
- Acts of independent significance doctrine
FLORIDA: A written statement or list referred to in the decedent’s will shall dispose of items of tangible personal property, other than property used in trade or business, not otherwise specifically disposed of by the will.
What is the UPC approach to tangible personal property lists?
UPC 2-513. Separate Writing Identifying Devise of Certain Types of Tangible Personal Property
Whether or not the provisions relating to holographic wills apply, a will may refer to a written statement or list to dispose of items of tangible personal property not otherwise specifically disposed of by the will, OTHER THAN MONEY. To be admissible under this section as evidence of the intended disposition, the writing must be SIGNED by the testator and MUST DESCRIBE the items and the devisees with reasonable certainty. The writing may be referred to as one to be in existence at the time of the testator’s death; it may be prepared before or after the execution of the will; it may be altered by the testator after its preparation; and it may be a writing that has no significance apart from its effect on the dispositions made by the will.
- A gaping loophole around the witness attestation requirement?
- Some states limit the value of property disposable by TPP list (Cal.)
HYPO: In year 1, Testator executes an attested will that reserves the right to make a separate Gift By Memorandum for TPP… Year 2, Testator drafts and signs a Gift by Memorandum disposing of TPP… Year 3, Testator revokes “all prior wills” and executes a new will that reserves the right to make a separate Gift by Memorandum for TPP… Year 4, Testator dies.
Did will executed in Year 3 revoke the Gift by Memorandum signed in Year 2?
NO. As a separate writing under UPC §2-513, the Gift by Memorandum is not a testamentary disposition or instrument. It has NO EFFECT standing alone; rather, its effectiveness relies on the existence of a validly executed will. Consequently, it was not revoked by the revocation clause of the subsequent will… TPP memo executed in Year 2 validated by TPP provision of will executed in Year 3.
What is the doctrine of ACTS OF INDEPENDENT SIGNIFICANCE?
A devise may identify its object (beneficiary) or subject (the gift) by reference to future acts, events, or occurrences.
- Lifetime motive a significant factor
UPC §2-512: Events of Independent Significance
A will may dispose of property by reference to acts and events that have significance apart from their effect upon the dispositions made by the will, whether they occur before or after the execution of the will or before or after the testator’s death. The execution of revocation of another’s will is such an event.
EXAMPLE: A testator’s will says that he devises his car at death to S… Testator has a toyota at the time but then gets a jaguar… The will is valid for S to get the Jag.
What happens when a testator executes a will in contemplation of marriage?
UPC §2-512 does not interfere w/ that practice bc a person still has lifetime motive for entering into a marriage.
- Grounds for contesting the devise to wife might be based on an alleged sham marriage or undue influence.
What is the rule for CONDITIONAL WILLS?
Statements of motivation, when phrased as a condition, can invalidate a will if the condition is NOT satisfied.
Estate of Rick, (La. Ct. App. Feb. 5, 2024)
- Holographic will (2014) was conditioned upon him dying from heart surgery
- He survived the surgery and then died in 2016
- The Court held that the will had to be read literally, didn’t apply unless he died during heart surgery
What are the various classifications of DISPOSITIVE PROVISIONS?
- Devise / bequest / legacy
- Specific, general, demonstrative, residuary devise - Power of appointment – flexibility on who gets what
- Testamentary trust – doesn’t exist until the will becomes effective; terms in the will
- External donative instruments incorporated by reference
- Inter vivos trust (pour over)
- List of tangible personal property
What is a specific devise?
A gift of particular assets or items of property
EXAMPLE: “I leave my house to my wife”
What is a general devise?
Gift of money in a specified amount
EXAMPLE: $10,000 to my former Trusts & Estates professor
What is a demonstrative devise?
Gift of money in a specified amount and payable from a particular source or account.
EXAMPLE: I leave $10,000 to my former Trusts & Estates professor to be paid from the sale of my diamond collection.
What is a residuary devise?
Gift of everything not given away elsewhere in the will.
EXAMPLE: All the rest, residue, and remainder of my estate, I leave to my wife.
- Every will should include a residuary clause
- Without one, property not covered by specific, general, or demonstrative devises passes by intestacy.
- Not adding one could be grounds for legal malpractice.
- Residuary clause should anticipate the possibility of predeceased beneficiaries by naming multiple contingent beneficiaries.
FLORIDA: Crucial to have a residuary clause because a handwritten note signed by the testator naming a contingent beneficiary (that wasn’t in the will) is NOT valid because holographic wills are invalid in Florida. See Aldrich v. Basile (Fla. 2014).
What are POWERS of APPOINTMENT?
- A conveyance in which a donor delegates donative authority to one or more donees.
- Powers of appointment can be drafted into an inter vivos gift instrument (e.g., a trust) or a will.
- It’s a way of conveying property that empowers donees to make decisions about when and who should receive a gift.
- It allows the donor to set parameters for how the donee may exercise the power of appointment.
- It facilitates sophisticated forms of wealth transfer tax planning
Restatement (Third) of Property § 17.1: A power of appointment is a power that enables the donee of the power to designate recipients of beneficial ownership interests in or powers of appointment over the appointive property.
EXAMPLE: “I give my house to my partner for life, and then to whomever my partner appoints by will.”
Powers of Appointment: VOCABULARY
Donor creates the power
Donee holds the power and has the right to exercise it
Objects are people to whom the power allows the donee to appoint the property
Takers in default receive the property if the donee doesn’t exercise the power
A general power is one that the donee can exercise in favor of either herself, of her creditors, or her estate, or the creditors of her estate
A special power is one that the donee can’t exercise in favor of either herself, or her creditors, or her estate, or the creditors of her estate
Example: T’s will gives his stock portfolio to his cousin C for life, and then to any of T’s siblings to whom C appoints by deed or will.
- T is the donor and C is the donee. C holds a special power bc C can’t appoint to herself (or to her creditors, or to…)
- Compare: if T’s will said that C could appoint to “anyone” then C would hold a general power, bc C could appoint to any one of the following: C, C’s creditors, C’s estate, or the creditors of C’s estate. Likewise, if C could appoint to “C’s creditor,” the power would be general.
What is the rule for TAX TREATMENT regarding powers of appointment?
General Rule = A transfer is taxable to the person who last possessed dominion and control over the property prior to the transfer.
Is the creation of a power of appointment taxable? If so, to whom?
- Generally, yes – to the donor
- It’s a transfer from the donor to the donee
- Any transfer tax liability is paid by the donor (gift tax) or by the donor’s estate (estate tax)
Is the exercise of a power of appointment taxable? If so, to whom?
- What about income generated by the appointive property before the donee exercises the power?
- What happens if the donee never exercises the power?
Donee of a GENERAL POWER is treated as the owner of appointive property under the federal income, estate, and gift tax laws. This is true even if the donee does not actually appoint the property to herself.
- Income generated prior to exercise IS TAXABLE to the donee
- Exercise of general power during life in favor of third party IS TAXABLE to the donee as gift to the objects
- Exercise or non-exercise of general power at death in favor of third party causes appointive property to be included in the donee’s taxable estate
Donee of a non-general or special power is not treated as the owner of appointive property for federal tax purposes bc the donee cannot appoint the property to herself.
- Income that accumulates in trust is taxable to the trust, not to the donee
- Special gift & estate tax rules for trusts:
Donee of special power may be authorized to… A. “Consume, invade, or appropriate property for the benefit of the possessor which is limited by an ascertainable standard relating to health, education, support, or maintenance” of the donee. B. withdraw greater of $5,000 or 5% of the trust corpus each year.
So long as the donee lacks power to appoint the rest of the property to the donee herself, the donee’s creditors, the donee’s estate, or creditors of the donee’s estate (otherwise power may be general), exercising power re: balance does NOT trigger a taxable transfer by the donee.
What are the REQUISITES for exercise of a power of appointment?
Restatement (Third) of Property § 19.1
A power of appointment is exercised to the extent that:
(1) the donee manifests an intent to exercise the power in an otherwise effective document;
(2) the donee’s expression of an intent to appoint satisfies the formal requirements of exercise imposed by the donor and applicable law; and
(3) the donee’s appointment constitutes a permissible exercise of power.
What happens if a power is released or is not properly executed?
Gift-in-default clause controls.
If no gift-in-default clause:
- General Power: unappointed property passes to —
- The power holder, if permissible appointee and living
- The power holder’s estate, if permissible appointee & deceased
- Otherwise reverts to donor or donor’s estate.
- Non-General Power: unappointed property passes to —
- the permissible appointees if permissible appointees are defined and limited and not contrary to donor’s intent
- Otherwise reverts to donor or donor’s estate.
What do FIDUCIARY PROVISIONS allow testators to do?
Fiduciary provisions allow testators to:
- Select a trustworthy fiduciary
- Define powers of fiduciary to transact on behalf of the estate
- Modify default fiduciary duties imposed on personal representative; exculpate fiduciary from personal liability
Fiduciary provisions are often boilerplate, but any modification of default rules should be carefully considered
- Default fiduciary powers are very broad; personal representative has all the powers of an owner of property.
- A fiduciary who abuses those powers can be removed and held personally liable for damages to the estate.
What is the rule for priority among persons seeking appointment as personal representative?
UPC §3-203
(a) Whether the proceedings are formal or informal, persons who are not disqualified have priority for appointment in the following order:
(1) The person with priority as determined by a probated will including a person nominated by a power conferred in a will (thumb on the scale)
…
(b) Objections to an appointment must take place in a formal proceeding.
…
(f) No person under 21 or a person whom the court finds unsuitable in formal proceedings is not entitled to be a personal representative
General Rule: The personal representative is the party with standing to litigate claims that could have been brought by decedent during life.
What rules apply when the DRAFTING ATTORNEY of the will is appointed as EXECUTOR?
- An executor does not require legal training.
- Attorneys must comply w/ ethical constraints governing solicitation of business when recommending that clients appoint them as executor.
-
Chapter 1 - The Essentials20
-
Chapter 2: Intestacy Statutory Distribution15
-
Chapter 3 - Wills: Protecting Testamentary Intent32
-
Chapter 4 - Wills: Formalities38
-
Chapter 5: Will Components & Provisions48
-
Chapter 6: Rules of Will Interpretation20
-
CALI - Omitted Spouses & Children14
-
CALI - Revocation23
-
CALI - Non Testamentary Documents7
-
CALI - Interpretation of Wills (UPC)34
-
CALI - Intestate Succession35
