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Chapter 51
DECEDENTS’ ESTATES AND TRUSTS
RESTATEMENT
At the time of an individual’s death, his or her obligations must be satisfied and their property distributed either
according to the desires they express in their will or by the provisions for intestate succession which take effect when
a party dies without a will.
A will is made by a testator or testatrix and the gifts are made under the wills as legacies, devices or bequests to
legatees or devisees. To create a valid will, the testator must have testamentary capacity which is the ability to
understand the significance of the will and the beneficiaries of the gifts made thereunder. State statutes specify the
form of a will but most require the will to be in writing, signed by the testator and attested to by the statutorily-required
number of witnesses. A will can be modified by a codicil or revoked. However, the act of revocation must be clear in
terms of the testator’s intent. A will can also be revoked by operation of law as when there is the birth or adoption of a
child.
Probate is the process whereby a court accepts a will and then conducts the administration of the decedent’s estate.
If a will is contested, the court must first conduct a trial or hearing to determine whether there was a lack of mental
capacity, undue influence, duress, fraud or forgery. If any of these problems is found, the will is not admitted to
probate and the estate is distributed under the intestacy statutes. Holographic wills are wills entirely in the
handwriting of the testator and are recognized as valid in some states. Living wills are documents that indicate an
individual’s desires with respect to life-sustaining medical treatments in the event they are in an irreversible, incurable
condition.
The order of distribution of an estate is specific legacies, general legacies and residuary properties. In the event an
estate is insufficient for purposes of paying creditors, the creditors take from the distributions in reverse order:
residuary property, general legacies and specific legacies.
If property is sold or given away by the testator prior to death, the bequest is adeemed or canceled. If the beneficiary
in a testator’s will has predeceased the testator, the gift does not lapse. Antilapse statutes permit the gift to go to the
deceased beneficiary’s heirs.
A surviving spouse may elect to ignore the provisions in the will and take his or her statutory share. Such an election
is generally made when the statutory share provides the spouse with more. With exceptions for surviving spouses,
testators can disinherit relatives.
If a decedent dies without a will, the state statutes on intestate distribution take effect. The statutes vary from state to
state but generally proceed in the order of surviving spouse, lineal descendants, parents, and then collateral heirs.
There are various means of distribution including per capita (equal) and per stirpes (by degree of relationship).
There are some prohibitions on inheritance including the murder of the decedent by the beneficiary.
The administration of an estate is handled by an executor/executrix if the decedent had a will, the
administrator/administratrix if the decedent did not have a will and by a personal representative under the UPC. An
administration of an estate is not necessary if the decedent’s estate is very small or the property was held as joint
tenants with a spouse. Creditors submit proofs of claims and their debts are paid prior to distributions.
A trust is a legal device by which real or personal property is held by one person for the benefit of another. The party
creating the trust is the settlor or trustor, the administrator is the trustee and the party entitled to benefits is a
beneficiary. The property in the trust is called the trust corpus or res. The trust has principal and income and
expenses are allocated according to their nature. A trust can be created while the trustor is alive (inter vivos) or by
the trustor’s will (testamentary trust).
The legal title to the res is with the trustee and the beneficiary has equitable title. A spendthrift trust prevents the
beneficiary from assigning his/her interests or rights to creditors.
Trustees have the duties of due care, loyalty and accountability. A trust can be terminated by its terms, because of
impossibility, by revocation of the settlor, by merger of legal and equitable title or by request of beneficiaries when the
settlor’s desires are not compromised.
STUDENT LEARNING OUTCOMES
LO.1: Define "testamentary capacity" and "testamentary intent".
LO.2: Discuss how a valid will is created.
LO.3: Explain how a will may be modified or revoked.
LO.4: Describe briefly the probate and contest of a will.
LO.5: Describe the ordinary pattern of distribution by intestacy.
LO.6: Explain the nature of a trust.
INSTRUCTOR’S INSIGHTS
Break the chapter down into three components – related Learning Outcomes are indicated in ( ):
1. What are wills and how do they transfer a decedent’s property?
Define will
List the parties to a will (LO.1)
Explain the form of a will (LO.2)
2. How is an estate of a decedent administered?
Define administration and the terms used in that process
Explain when administration is not necessary
3. What is a trust and how is it created and administered?
Define trusts (LO.6)
Describe how a trust is created (LO.6)
CHAPTER OUTLINE
I. What are Wills and How Do They Transfer a Decedent’s Property?
A. From a practical point of view, emphasize the importance of the students’ taking the time to discuss with
their parents or other relatives what should take place on their death. People tend to shy away from this type
of conversation, but it makes good sense to discuss these very important issues. Is there a will? Where is it
without an attorney? And pose a question that is sometimes extremely difficult to answer: What would the
decedent want us to do? You will never know the answer unless you ask the question before the decedent
Students are usually fascinated with trusts containing a spendthrift clause. Bring in several examples of
B. Wills
1. Definitions
a. Testator, testatrix: maker of the will
2. Parties to will
a. Qualifications depend on state law
b. Testator
i. A testator must have testamentary capacity
ii. Emphasize that a testator or testatrix must always have testamentary capacity. However,
students should not get the idea that this means that the person must be of even average
CASE BRIEF: Ivie v. Smith
439 S.W. 3d 189 (Mo. 2014)
FACTS: Patricia Watson, the decedent, was raised in Missouri, but taught elementary school in California
where she had three marriages and one daughter who was murdered in 1980. Ms. Watson retained
close ties with her half siblings, Richard Ivie, Jimmie Ivie, Ladonna Small, and Bernard Ivie (“the
Ivies”).
When Watson retired from teaching in February 2002, she married Smith. At the time of their
marriage, Watson was 70 years old and Smith was 60 years old. Watson had substantial income
and approximately $1 million in assets, including her home in California, real estate in Missouri, a
pension from the California State Teachers' Retirement System (CALSTRS), and several bank
accounts, retirement accounts, and vehicles. Smith had filed for bankruptcy in 1997 and had
minimal income and assets.
Watson created her original trust on May 9, 2002, about three months after marrying Smith. At the
same time, Watson also created a will with a provision “pouring over” all of her estate's assets into
the trust. Watson's Missouri attorney, Reginald Young, prepared the documents. All of Watson’s
property was conveyed into the trust. They moved to Missouri in 2004.
The Ivies were the sole beneficiaries of the trust. The trust provided: “It is expressly the Grantor's
intention that her husband, Arnold L. Smith, not receive any part of the Trust Estate.”
Watson began showing signs that her mental health was progressively deteriorating. She saw a
doctor who wrote in his report: “She thinks her husband is trying to poison her with rat poison. She
denies hallucinations, but apparently gets very angry quickly on questioning.... At this time the
patient seems to have paranoia.”
According to her sister, Watson wanted a divorce from Smith because he had ruined her life.
Watson also told one of her brothers that she thought she was losing her mind, that she was afraid
of Smith, and that she thought he was trying to poison her.
Watson had a neuro-psychological evaluation at the Mayo Clinic in October 2005. Test results
showed “a mild to moderate degree of cognitive impairment,” which “likely” reflected an abnormality
that had appeared on brain imaging tests. The Mayo Clinic physician concluded that Watson's
condition was most consistent with a diagnosis of vascular dementia. He recommended ongoing
monitoring.
A second physician stated without qualification in November 2006 that the diagnosis was
Alzheimer's dementia.
Before Watson executed the first trust amendment, she was no longer able to care for herself. She
needed help with all of her daily living activities, including walking, bathing, dressing, preparing
meals, using the telephone, driving, getting in and out of the car, and walking up and down stairs.
By May 2007, at a family gathering, Watson did not recognize the children of one of her brothers
and other previously known family members.
Roughly one month after leaving the hospital following a hospitalization, on July 27, 2007, Watson
signed the first trust amendment decreasing the Ivies' share of her property and granting Smith a
share. Each of the Ivies would now receive $25,000 upon her death. Smith would receive the
remainder. The amendment also added a “no-contest” clause, the purpose of which was to cause
anyone challenging the trust to lose his or her share.
Watson's mental health continued to worsen. At some point after July 2007, she visited one of her
neighbors and took off her own clothes in the neighbor's living room. In-home nurses' reports reflect
that Watson's dementia was uncontrolled, she was paranoid, and experienced forgetfulness and
mood swings.
From early December 2007 to mid-January 2008, Watson retitled her checking account and money
market account from the trust to her own name individually and signed documents to “pay on
death” to Smith. Watson removed the Ivies from all accounts and beneficiary status.
The in-home nursing staff noted that her forgetfulness continued and that she had bouts of
confusion. In late January, she asked Smith, “Am I still your wife? Are we married?” In late March,
she was disoriented in her home and could not find the bathroom. In April, she wanted her lawn
hand-pulled instead of mowed. In May, she was hospitalized after falling, and hospital reports
repeatedly showed that she was “Confused/Disoriented/Senile/Irrational/Non–Compliant.” On June
5, back at home, Watson said that she saw a baby while staring at the ceiling and that she was
hearing voices.
Watson lived in a nursing home until July 2, 2008, which was the day she signed the second trust
amendment. The second trust amendment, which Young also prepared, further reduced the Ivies'
shares in the trust estate and increased Smith's share. Because Reginald Young recognized that
Watson's mental health had deteriorated and because he anticipated controversy over the changes
to Watson's estate plan, he prepared a memorandum for his file stating that he believed she
understood what she was doing.
Watson died April 10, 2009. After Watson's death, the Ivies filed to set aside the trust amendments,
beneficiary designations, and various property transfers. The court entered judgment for the Ivies.
The court found that Watson lacked testamentary capacity with regard to her estate plan. Smith
appealed.
ISSUE: Did Watson have capacity to make the changes in her estate?
REASONING: There was substantial evidence to support a finding that Watson lacked testamentary capacity to
make the changes to her estate plan. Although the testamentary capacity standard takes into
account the ability of persons who have been diagnosed with some form of mental defect to make
a valid will or trust, it remains a factual issue of whether a person had testamentary capacity at the
particular time of execution. Lower courts are in the best position to decide precisely when a person
has testamentary capacity, and the bizarre and declining behaviors of the Testator indicate that she
did not understand what she was doing through the changes and to whom.
Affirmed.
c. Beneficiary – a guardian for minors may be required
3. Testamentary intent – intention to make provision that will be effective only on death
4. Form
a. Statutory formalities
d. Attestation
e. Date
DISCUSSION POINTS: E-Commerce & Cyberlaw
Where There's a Video, Is There a Will?
Discuss new ways video and technology can make intent clear.
Discuss risk in that statutory requirements for validity may not allow video.
Discuss risk of damage and unavailability.
5. Modification of will – codicil: a separate writing
6. Revocation of will
CASE BRIEF: In re Estate of Speers
179 P. 3d 1265 (Okl. 2008)
FACTS: On June 15, 1982, Shirley Joyce Speers signed a “Last Will and Testament.” It named her
husband, Ralph Speers, as her executor. It also gave her daughter, Sherry Arlene Ross, her
household furnishings and appliances, and her son, Daniel Eugene Speers, her livestock. Her
husband was named the beneficiary of the rest of the estate, provided he paid the estate's
expenses. If he failed to do so, his share went to their children and grandsons. The will was
probably witnessed and signed, but not notarized. The witnesses did not see any lines or
strike-outs in the will when they signed it. Shirley died on April 20, 1997, and the will was not
probated at the time of her death.
After his wife's death, Ralph married Ann Speers. Ralph died some time before June of 2005, and
Ann then discovered a copy of Shirley’s will with lines through it and cross-outs. She filed a petition
seeking to admit the will to probate. The will she submitted contained several handwritten strikeouts
and interlineations. Shirley’s children objected to the admission of the will, arguing that it was
invalid because the original will was destroyed.
The court found for Ann and the children appealed. The court of appeals reversed and Ann
appealed.
ISSUE: Was the will valid or had it been revoked?
HOLDING AND
REASONING: The court affirmed, holding that the original will was not self-proving because of the lack of a notary
seal and that its strike-outs indicated that Shirley had revoked its provisions. The result was a
DISCUSSION POINTS: Have the students discuss the revocation of wills using the In re Estate of Speers case.
c. Revocation by operation of law
i. Birth
7. Election to take against the will
8. Disinheritance
DISCUSSION POINTS: Sports & Entertainment Law
Wills, Estates, & Probate Mistakes of the Rich and Famous
Even those who are young should take care in estate planning – for taxes, and particularly when the partners are not
married. Taxes are affected and everyone needs to take care to prevent battles among the heirs over property.
9. Special kinds of wills
a. Holographic wills
b. Living wills
i. Valid in most states
II. How is an Estate of a Decedent Administered?
A. Definitions
1. Executor/executrix – person named in will to administer estate
B. Probate of will
C. Will contest
1. Lack of mental capacity
CASE BRIEF: Ramsey v. Taylor
999 P. 2d 1178 (Or. App. 2000)
