Wills Law New York Bar Exam Preparation Condensed Revision Notes
New York Law Governing Wills and Estates
- Estates Powers and Trusts Law (EPTL)
- Surrogates Court Procedure Act (SCPA)
- Intestate- when person dies without will
2.Decedent - a person who dies without a will
- Ditsributee – who inherits property under the intestate succession.
- Issue/Descendent – have descended from common ancestor.
- Administrator – appointed to administer the estate of the decedent.
- Administration proceeding - initiated by a ditsributee:
- to appoint administrator and administer the decedents property AND
- ultimately probate the estate
- Intestate property – assets held in the decedents name ALONE & that do not pass by operations of law or by will.
- Operation of Law –property that passes automatically because of the way the property’s title held, regardless of Will or intestacy.
- Residuary – The rest of the estate.
- Application of Intestacy Rule
The EPTL applies in intestacy, when
- No will left
- The will does not make a complete distribution of the estate.
- Ditsributee successfully challenges the will & the will is denied probate.
- Order of priority for appointment as administrator
- Surviving Spouse
- Any other ditsributee
- Decedent survived by spouse & no children (or issue of children)
- The Surviving spouse takes the whole estate.
- Decedent survived by spouse and children (current or earlier one)
- The surviving spouse takes - $50,000 and ½ of the residuary
- The issue takes – The left over residuary is divided by all children equally (if estate less than $50,000, the whole goes to surviving spouse)
- Decedent survived by children only (& none of them predeceased the decedent)
- It passed to the children in equal shares
- Decedent survived by children and issue of predeceased children
- It passes to the alive children & the issue of the dead children by representation or per capita.
Per capita distribution The rule
Step 1 – Divide into as many shares as there are issues at the FIRST GENERATION LEVEL
Step 2 – All living issue at the FIRST GENERATION LEVEL take one share each
Step 3 – The shares of the deceased issue at the first generation level are combined & divided equally among the takers at the NEXT GENERATION LEVEL.
Rule of thumb – Issue in the same generation will always have equal shares.
- daughters/sons in laws take nothing through intestate
- c. Living children issues take nothing
- Children that die before the decedent cannot leave their interest in the decedents estate by will. It will still be passed to the takers at the next generation.
- Decedent not survived by spouse or issue
- All to parents or surviving parents
- If not survived by parents: To issue of parents (i.e. siblings & issue of deceased siblings) who take per capita at each generation.
- If not survived by parents or issue of parents:
- ½ to maternal ½ to paternal grandparents or surviving grandparent (if neither living) to their children. If not survived by one side than to the other side to grandparents or their children and grandchildren.
- if only survived by great grandchildren or grandparents:
½ to maternal ½ to paternal grandchildren in equal shares. Not survived on one side, all to the other side.
- If the nearest next of kin is great great grandchildren or great grandparents or great grandparents issue – Goes to State of New York
- Per Stirpes VS. Per Capita Distribution (by representation)
- In most states & old law in NY – The distribution is per stirpes under which the issue of the predeceased child takes the share that the predeceased child would have taken if alive.
- NY - The default distribution is per capita at each generation in both intestacy & will
- Per capita at each generation will apply even if decedent died with a will: e.g. executed a will, that bequeathed $900,000 “to the issue of by brother”
- A will can override & change the default distribution to “per stirpes”
NOTE – Per capita at each generation results in the same distribution as per stirpes IF ONY ONE PERSON, at the first generation level died.
NOTE- NY is a modified per stirpes jurisdiction
- Inheritance rights of children
- Adopted children
- Adopted children & their issue – full inheritance rights from the adopted family & vice versa if the adopted child dies first.
- Child adopted by new family - that child has no inheritance rights from birth parents or others members of the birth family.
Exception – Child adopted by the spouse of a birth parent – then child can inherit from the adopted parent and either birth parents. One way rule.
- Child adopted by relative – if the adopted child is relative to the decedent by both a birth relationship and an adopted relationship, the child inherits under the birth relationship.
When the adoptive parent dies intestate, then the child inherits under the adoptive relationship.
- Non-marital children
- Has full inheritance rights from the mother and mothers family.
- A non-marital child inherits from the birth father only if paternity is established by ONE of the following FOUR tests:
- The father marries the mother after the child’s birth (legitimation by marriage)
- An order of filiation in a paternity suit is entered adjudicating the man to be the child’s father.
- The father files a witnessed & acknowledged (before a notary public) affidavit of paternity with the Putative Father registry
- Paternity is established by – clear & convincing evidence
may include, not limited by:
- DNA genetic marker test
- The father openly & notoriously acknowledges the child as his own
such as: putting his name on the birth certificate, telling people
this is his child.
Other clear and convincing evidence?
Visitation, gifts, participating in school activities
NOTE: SUPPORT ALONE IS NOT ENOUGH!
- Variations to intestate distributions
- Circumstances disqualifying spouse taking intestate share
Acronym = DISMAL
D – Divorce – final decree of divorce or annulment recognised as valid under NY
I – Invalid divorce – the surviving spouse procured a divorce or annulment not recognized as valid under NY
NOTE – Surviving spouse not disqualified if the deceased spouse procured the invalid divorce or annulment.
S – Separation Decree- a final decree of separation was rendered against the surviving spouse. A separation agreement does not result in disqualification unless there is specific language in the agreement waiving the survivors spouse’s right under the EPTL.
NOTE – Surviving spouse not disqualified if final decree of separation rendered against the deceased spouse
M – Marriage is void – as incestuous or bigamous or fraud
AL- Abandonment or Lack of support – the surviving spouse abandoned or refused to support the deceased
NOTE – The surviving spouse not disqualified if the deceased spouse abandoned or refused to support him.
Rule – We assume the surviving spouse predeceased and we drop their share to their kids their issue, or whoever is next in line.
Note – No slayer statute in NY
Minor note – If dealing with joint property, you sever the joint tenancy and the bad person, that one that killed gets the he put in.
- Lifetime gift to intestate distributee – Advancements
- At Common Law –A lifetime gift to a child was presumptively and advancement of his intestate share, to be taken into account when distributing the estate at death.
- NY Rule – rejected the advancement presumption by statute. Thus there is no advancement unless proven by:
- a contemporaneous writing made at the time of gift (e.g. 2 weeks not contemporaneous) AND
- signed by the donor or the donee
SEE FORMULA IN HANDOUT NOTE- If there is an advancement that will be subtracted, e.g. 3 children, estate value $300,000, advancement was $30,000 = Total amount to be distributed = $330,000 / 3 (number of children) = 110,000 each child’s share = 2 children get 110,000 each the one that receive advancement gets 110,000 – 30,000 80,000
- Disclaimer “Renunciation” by intestate distributee
- A distributee can disclaim or renounce her interest in the decedent’s estate in whole or in part. Effect?
Rule – Considered to have predeceased the decedent same as spouse under DISMAL.
- A valid disclaimer must be:
- in writing, signed & acknowledge (before notary public) AND
- Accompanied by a separate affidavit stating that no consideration was received for disclaiming (unless the surrogate’s court authorizes receipt of consideration for the disclaimer) AND
iii. Irrevocable AND
- Filed with the surrogate’s court within 9 months after the date of death.
Note – 2 children one disclaims (has 2 issues) second child predeceased (has 1 issue) = their children, all three would share equally 1/3 each. However if one child did not disclaim, and second child predeceased, then the second child’s share would go to his issue.
- Why would anyone want to disclaim an inheritance?
To avoid taxes, creditors …BUT specifically cannot disclaim to affect medication or medic care.
- Testate – when person dies with a will
- Testator – Person who dies with a will
- Beneficiary – person who receives a bequest/legacy or devise for those who inherit real property, under will.
- Executor – named in the will to administer the estate of a testator.
- Probate Proceeding (probate)
A surrogates proceeding to
- judicially determine whether the testator’s will was validly executed & determine the intestate distributes
- Appoint the executor to administer the testator’s estate.
- Probate estate – assets held in the testators name ALONE that do not pass by operation of law & which the executor administers in accordance with the testators will.
- Satisfaction of legacy – a lifetime gift to a will beneficiary
VALIDITY OF WILLS
- Requirements of a duly executed will
- 7 Point Test
- must be 18 years old
- Signed by the testator or by someone at the testators direction and in her presence
NOTE – When testators name is signed by another person, the proxy:
- Must also sign her name
- Cannot be counted as an attesting witness AND
- Must affix her address (BUT failure to affix does not invalidate the will)
iii. T’s signature must be at the end there of
- T must sign the will or acknowledge his earlier signature in the presence of each witness
- T must publish the will – by declaring to the witness that they are witnessing a will
- There must be at least 2 attesting witnesses AND
- NY does not require that the witness sign in each other’s presence or in the testator’s presence.
- attesting witness must attest to the testator’s signature when the testator signed the will (or acknowledge his signature). If T forgot to sign when the witness signed, and added his signature in the witness’s presence later, the will is denied probate. However, contemporaneous transaction will not make the will invalid.
vii. Execution ceremony must be completed in 30 days which starts to run when the first witness signs, not when T signs.
- Will admissible to probate when it was not signed at the end thereof?
- Yes, but the words following the signature are not given effect.
- Exception – an entire will is declared invalid if the matter following the signature is so material that giving effect to that above the signature and not giving effect to that below would defeat T’S intentions. SEE SCENARIOUS IN HANDOUT
Attesting witness signed before T-no problem if ceremony contemporaneous
Attesting witness held and guided T’s hand when he signed – no problem is that voluntary (e.g. T has Parkinson disease and asked for help)
T’s signature is barely legible – no problem any mark intended as T’s signature is OK, even X.
The two attesting witnesses did not sign in each other presence – no problem, no requirement for them to do that.
Attesting Witness predeceased T, will still admissible to probate? – Yes as long as you meet the 7 point test
- Burden of proof – due execution
Will proponent – the person who offers the Will for probate (usually the executor)
- The will proponent has the burden of proving due execution
- If one witness is not available to testify – the testimony of one witness suffices if the other is dead, absent from state, incompetent or cannot be found with due diligence.
- If none of the witnesses are able to testify – the will proponent must prove the signature of both the testator and one witness.
- If the will is not self-proved – both attesting witnesses must testify as to the facts necessary to show due execution.
- Attestation Clause – Appears below the testators signature line & above the witnesses signature lines & and states all the elements of due execution.
- Probative value – the clause is a prima facia evidence of the facts presented
- NOT a substitute for live testimony – is mere a corroborative of the witness testimony. A will proponent must still call the witnesses to testify or prove their signature.
iii. Reasons for having attestation clause:
- If witness has a bad memory
- If the witness is hostile (e.g. recalls signing some other document, so can be used to rebut the witnesses evidence)
- Self- proving affidavit – it is attached to the back of the will, mechanism set forth by the legislature, which recognizes that the validity of most wills is not contested.
- what is it? Witnesses sign a sworn statement in the presence of an attorney that recites all the statement if called to testify in court that they would make.
- Substitute for live testimony – yes, unlike the attestation clause. It is a sworn testimony.
- The affidavit can be signed at any time after the will is executed, usually signed at the same time.
- The will is admissible to probate on the strengths of the affidavit UNLESS interested party objects, than formal rules of proof of due execution apply.
NOTE – Interested Party – intestate distributee or will beneficiary who is adversely affected by the admission of the will to probate.
- Interested witness statute
- Rule – The validity of the will is not affected if a will beneficiary is also an attesting witness BUT the bequest to the witness is Void UNLESS:
- There are at least 3 witnesses and 2 were disinterested – so the signature of the witness-beneficiary is not needed to admit the will to probate so that witness-beneficiary can receive their bequest OR
- The interested witness who would also be an intestate distributee if the testator died without a will. In this case the witness-beneficiary takes the lesser of the bequest under the will or his intestate share. *
- Purpose of Statute to avoid fraud.
Note – Executor named in the will can be compensated only gifts under the ill trigger the interested witness statute.
- Foreign will act (note very popular topic)
- Will admissible under NY if validly executed under:
Acronym – END
- the law of the state where the will was Executed.
- NY LAW
- The law of the state where the T was Domiciled, either when the will executed or at death.
NOTE – The rules only to determine whether the will is admissible to probate in NY. Once admitted, NY Law governs constructions and application of its provisions.
- Holographic and nuncupative wills
- holographic will is – entirely in T’s handwriting, signed but not witnessed
- nuncupative will is – oral will, dvd, cd etc
- Both are void in NY
- Exception – Both valid for the armed forces during declared or undeclared war (void after 1 year after discharge) & mariners at sea (void 3 years after discharge)
- Application of foreign will act – if holographic will executed in a state that recognises it & the person dies in NY, then will be ok to probate in NY.
- Lawyer’s malpractice
- There is no privity of contract between the beneficiaries and the lawyer, the duty is only to the client, who contracts the lawyer’s services.
Court of Appeals case derivation
Facts: the decedent was advised to include life insurance policies that were initially limited partnership that were controlled by the decedent to the estate itself, he was told it will decrease his estates tax liability, instead it increased the estate tax substantially.
Court ruling: - No privity to 3rd parties but there is privity between the executive of the estate and the estate the lawyer.
REVOCATION OF WILLS
- What constitutes Valid revocations?
- Will can be revoked in 2 ways:
- By subsequent testimonial instrument (that meets 7 point test)
- By a physical act (e.g. Burning, tearing, cutting, cancelling, obliterating or other acts of mutilation)
BUT MUST HAVE INTENT TO REVOKE!
- Writing on a will that you revoke it does not invalidate the will, unless you write “the will should be void”, on every page, over the whole page.
- Anything done to the signature with intent, revokes the will.
- Express Revocation
Language in a will “I hereby revoke all wills heretofore made by me”
- If you find two wills that say “my last will”
- To the extent possible – record the 2 instruments together, second will be treated as amendment to first will & will only revoke the first will to the extent their inconsistent provisions.
- Exception – If the second will is wholly inconsistent with the first, the first will is revoked by implications.
- Revocation by physical act of another (revocation by proxy)
- The physical act must be
- At the T’s request
- in T’s presence AND
- Witnessed by at least 2 witnesses – in total there must be 4 people
- Presumption regarding revocation of wills
- When will that was last seen in T’s possessions not found after death – presumption is T revoked by physical act.
- When will found that was last seen in T’s possession in a damaged condition after T’s death (torn in two) Presumption is T was the one that revoked it.
- Neither presumption arises if the Will was last seen in the possession someone adversely affected by its content
- Evidence is admissible to rebut the presumption of revocation when the will cannot be found (e.g. will was left with attorney) or is found in a damaged condition (e.g. T told witnesses that destruction was accidental)
- Changes on the face of the will after has been executed
- The only 2 ways T can make changes in her will are:
- write new one which revokes first one OR
- make a codicil to the first will, which changes part of the will
BOTH MUST SATISFY THE 7 POINT TEST
NOTE –Interlineations & cross-outs immediately before she signed the will and the witnesses signed as attesting witnesses – these changes will be valid because they are part of a duly executed will.
- No Revival of Revoked will
- If T executes a will that is revoked by a later will containing a revocation clause, the 1st will CANNOT be revived by T merely revoking the later one.
a.1st will can only be revived 2 ways
- Re-execution – signed by T and 2 witnesses
- Republication by codicil – where validly executes a codicil to the 1st will making changes.
NOTE – The no revival rule also applies to codicils
NOTE – YOU NEED A VALIDLY EXECUTED DOCUMENT TO MAKE A CHANGE!
- Dependent Relative revocation (second best solution doctrine)
- DRR permits a revocation of a later will to be disregarded. The effect would be to permit probate of the later will.
- requirements for application of DRR:
- The T’s revocation must be premised or dependent upon mistake of law (i.e. Revocation of later will, will validate the prior will).
- The disposition that results from disregarding the revocation of the later will must come close to the disposition the T intended when he attempted to revive the earlier will*. (If you are dealing with 2 totally different testamentary schemes, than everyone loses, & Intestacy rules apply)
- NY – DRR has been applied in one appellate division case, but never by the court of appeal.
EXAM TIP- If you given a DRR Q, argue both ways.
- LOST WILL STATUTE
- Use in 2 situations
- Truly lost will
- The lost will proponent must prove that-
- the lost or later will was duly executed- refer to 7 point test AND
- The lost or later will was never revoked, so must:
- Overcome the presumption of revocations OR
- Prove that revocation should be disregarded under DRR.
- Wills provisions -clearly and distinctly proven by each of at least 2 credible witnesses or by copy or draft of the will proved to be true and complete.
Note – revoking a codicil does not revoke the entire will.
DEATH OF BENEFICIARY DURING THE TESTATORS LIFETIME
Note – T cannot make a gift to a deceased person
- ANTI-LAPSE STATUTE
- If beneficiary dies during T’s lifetime, the gift to the beneficiary lapses (fails) UNLESS SAVED by the states anti-lapse statute.
- NY Anti-lapse statute – gift does not lapse but vest in the deceased beneficiary’s issue IF BOTH conditions satisfied:
- The predeceased beneficiary was T issue, brother or sister) AND
- This predeceased beneficiary leaves issue who survives the T.
Note – Under Testate rules disclaimer is considered to have predeceased the T.
NOTE – A CONDITION TO A BEQUEST (I.E. IF HE SURVIVES ME) TRUMPS ANTI-LAPSE. AND IN-LAWS ALWAYS LOOSE.
- Death of adopted out child – NY court of appeals case
- Even though the child was adopted out, if the T specifically named the adopted out son in his will, the anti-lapse saved the T devise to the adopted out son’s issue.
- Lapse in Residuary Gift – Surviving Residuary Beneficiaries Rule
Absent a contrary provisions in the will, if the T residuary estate is:
- Devised to two or more persons AND
- The gift to one of them fails or lapses for any reason AND
- The anti-lapse statute does not apply.
THEN the other residuary beneficiaries take the entire residuary estate in proportion to their interest.
NOTE - Anti-lapse trumps the surviving beneficiaries rule
- Class gift in general
- Absent a contrary provision in the will, if a will makes gift to group of persons described as a generic class (e.g. children, siblings) & some members of the class predecease T, the class members that survive take in equal shares
- When T names B’s individually not as class - if predeceased it will not go to the other named individuals it will go back to residuary.
NOTE- Anti-lapse trumps the class gift rule.
- Construction of a class gift implicating an “adopted out” child
- If a child is adopted by a new family, the adopted out child does not take as a B of a class gift made in the will of a member of the child’s birth family. UNLESS she is adopted by a member of the birth family.
- Rule of convenience
- The class closes at the time a distribution to the class must be made. Later-born class members are excluded from taking as members of the class.
NOTE – NOT excluding from taking as members of the class if the gestation principle applies, there are 280 days from conception to birth.
- When the class closes
- On T’s death
- A life estate or income interest with a remainder to a class of B’s – the class closes at the death of life tenant or the income B.
- Revised Uniform simultaneous death act (RUSDA) – absent a will provision to the contrary, if a person dies under circumstances where there is insufficient clear & convincing evidence to prove that such person is to have survived the other by 120 hours (5 days) the property is distributed as through he predeceased the other person.
NOTE – look at whose estate you are distributing
- RUSDA & Jointly-held property – passes as through each co-owner survived the other (as in tenancy in common not as survivorship property)
CHANGES IN TESTATOR’S FAMILY AFTER THE WILL IS EXECUTED
- T marries
- Marriage has no effect on the validity of the will. May affect gift & dispositions under the will.
- NY – PROVIDED RIGHT OF ELECTION – so T cannot disinherit his spouse.
- T “unmarries”
- If court renders a final decree of divorce, annulment if separation after the execution of will, all gifts & fiduciary appointments in favour of the former spouse are revoked by operation of law – you read the will as if the spouse predeceased T.
- All gifts & fiduciary appointments in favour of the issue of the former spouse are NOT revoked by operations of law.
- An appointment of the former spouse as guardian of the couple’s children is NOT affected.
- If the couple reconcile & remarry ALL provisions in favour of the former spouse are restored.
NOTE – Annulment, separation divorce decree –knows out the spouse from things passing by operation of law i.e. life insurance, totten trust, things previously deemed contract.
- T’s child is born adopted after the will is executed
- The EPTL does not protect children who are alive when the will is executed.
- EPTL only protect PRETERMITTED (afterborn) children who are
- a. Not provided for by any SETTLEMENT AND
- Neither provided for nor mentioned in the WILL
- if the T had one or more children when the will was executed AND
- no provisions is made for any children, then pretermitted child inheritance nothing – on equal grounds with other children.
- The will made gifts to the other children, the pretermitted child –will share in the amount to other children as if a class gift was made.
- It appears that T intention was to only make limited provisions to the children at the time the Will was executed, the pretermitted child: takes his intestate share.
- If T has no children when the will was executed:
- than the pretermitted child gets his intestate share.
- If T devises a different amount to each child, than add the amounts together and divide by the number of children (including the pretermitted child) = the amount the pretermitted will get (which will come from the other kids proportionally)
- Common Law Rule -When a will does not make a complete distribution of the estate (resulting impartial intestacy), WORDS OF DISINHERITANCE IN THE WILL are ineffective with respect to property passing by intestacy.
NOTE – Intestacy governed by intestacy law not by T’s will.
- NY Negative Bequest rule
WORD OF DISINHERITANCE ARE GIVEN FULL EFFECT IN PARTIAL INTESTACY!! We treat that person as if she predeceased T. However if for example it’s T daughter, and she should receive the residuary and she has children, then her children would take the residuary estate that falls into intestacy’s daughters issue via anti-lapse statute.
VARIATIONS TO TESTATE DISTRIBUTION
- Lifetime gift to B – Satisfaction of Legacies
NOTE – “Satisfaction of legacy” is the Wills equivalent of “Advancements” in intestacy.
- Common Law – a lifetime gift (made after Wills execution) to a B named in the T’s will was presumptively made in partial or total satisfaction of the legacy, to be taken account when distributing the testator’s estate at death.
- NY – has rejected the satisfaction of legacies presumption by statute. Thus, there is no satisfaction of legacy unless proved by (Same as for advancement)
- contemporaneous writing made at the time of the gift AND
- signed by the donee or donor
- Reference to facts & events outside the will
- 1. Incorporation by reference – extrinsic document
- Common Law – the terms of an extrinsic doc can be incorporated by reference if (i) the document was in existence when the will was drafted (ii) the will shows an intent to incorporate the document & (iii) the document is clearly identified by the language in the will.
- NY – DOES NOT RECOGNISE INCORPORATION BY REFERENCE, EVERYTHING HAS TO BE FORMELY EXECUTED!
- Acts of independent significance (non-testamentary acts)
- Acts performed by the testator after the will is executed which have a purpose or motive independent of any testamentary purpose are given full effect when distributions are made.
- Exception – Title docs (e.g. deeds, stock certificates, bank passbooks) can only be transferred as mandated by law.
CHANGES IN DISTRIBUTION OF TESTAMENTARY GIFTS
- Classification of gifts:
Specific Gifts – “I devise my computer to my son”
Demonstrative legacy – general amount but specific source from which the amount should be paid (“I bequest 5m, to be paid from the proceeds of the sale of my GM stock, to my daughter”)
General Legacy – A general amount “I give the sum of 5m to my daughter”
Residuary Disposition – “I give all the rest, residue & remainder of my estate to my son”
Partial Intestacy – where partial intestacy results & the will has no residuary clause.
- Abatement (Reduction) of legacies
- If there are more claims against the estate than there are assets to cover all gifts made under the will, the gifts under the will abate creditors get priority.
- Orders of Abatement – Absent a provision in the will, the order in which a testator’s property abates is:
- Intestate & Residuary Property THEN
- General Gifts THEN
- Demonstrative Gifts THEN
- Specific Gifts
- Ademption (Failure of Gift)
- If T makes a specific gift of property, & the property cannot be found or is no longer owned by T at the time of his death, the gift fails under the doctrine of ademption (disregarding T’s probable intent)
SO – If the gift does not exist the person getting the gift loses
NOTE- ADEMPTION ONLY APPLIES TO SPECIFIC GIFTS
- Reason demonstrative legacies do not adeem (a general gift from a specific source) – will turn into a general legacy if there is no cash in the estate or if the designated source is no longer in existence, other assets will be sold to satisfy a demonstrative legacy.
- Three statutory exclusions
- Insurance proceeds for lost, damaged or destroyed property – B will take the insurance proceeds to the extent that they are paid after death
- Proceeds received under an executory contract – a contract that has not yet been performed, B would get those proceeds that are paid after death.
- Proceeds from a guardian or conservator’s sale of specific bequeathed property: B entitled to receive money or property in which the proceeds of the sale or transfer can be traced, if they can’t be traced you have adamption.
D- Specific Gifts of encumbered property – no exoneration of liens
- Common Law – If T makes a specific gift of property that is subject to a mortgage or other lien the T is personally liable, the B is entitled to have the lien exonerated (discharged)
- NY – Lien on specifically devised property are NOT EXONERATED unless the will directs exoneration. Therefore B will take subject to the note and will take exactly what T owned.
- Bequest of shares of stock & other securities
- a. Gifts of shares of stock in publicly-traded corporations are – general gifts & don’t adeem.
- Exception – Gifts of shares of stock in publicly-traded corporations are SPECIFIC GIFTS if T bequeaths “my.. stock”
2.Gifts of shares of stock in closely-held companies are – SPECIFIC GIFTS are adeemed if they don’t exist.
- Gifts of shares of stock where a stock split occurs are – treated as SPECIFIC bequest for the purpose of the split (irrelevant publicly-traded or closely-held or used language such as “MY”)
1 .Probate Estate – property that T owned SOLELY in his name at the time of his death, which is disposed of pursuant to the terms of his will or passes by intestacy.
- Non-probate assets – interest in property that are not subject to disposition under the will or via intestacy.
- Categories of Non-probate Assets:
- Property passing by right of survivorship (joint bank account/ joint stock account/or payable on death securities)
- Property passing by contract (life insurance policy/employee benefits payable to a B other than the decedents or decedent’s estate)
NOTE – If the insurance or benefits proceeds are paid to T’s executor or estate, the proceeds become probate assets.
- Property held in Trust
NOTE – The term of the trust will govern the disposition of the trust assets.
- Property over which the decedent held something called a power of appointment.
ELECTIVE SHARE STATUTE
Estate for the purpose of elective share is called the augmented estate
is defined as testamentary substitutes plus the deceased spouse’s probate estate minus outright bequests
- Elective share in general
- Purpose – to protect the surviving spouse against disinheritance by giving him a minimum share of the T’s probate estate.
ELECTIVE SHARE = THE GREATER OF $50,000 OR 1/3 OF THE ESTATE.
- Payment of elective share amount
- Calculations of amount payable – in theory the elective share is only applied to T’s net probate estate.
NET PROBATE ESTATE – is the value of the estate after payments of debts, but before the payment of estate taxes.
- If the elective share amount is not satisfied for the surviving spouse, others will contribute proportionately (pro-rata).
- Who contributes to payment? B’s under the will, B’s of testamentary substitutes &/or intestate distributes.
- Surviving spouse’s elective VS. Intestate share
- under intestacy the surviving spouse takes the entire estate (if T not survived by issue) OR $50,000 PLUS ½ the balance of estate (if T survived by issue)
- Testamentary substitutes
- Since elective share, theoretically applies only to the T’s probate estate, a T intent on disinheriting his spouse could defeat the protection of the elective share statute by transferring non-probate assets to other persons.
2.To prevent this, the elective share includes the probate estate & testamentary substitutes (collectively known as augmented estate or elective share estate).
- 3. Testamentary substitutes
Acronym – T subs need a TS LEG UP
T –Totten trust – including bank account in the T’s name in trust for another & payable on death.
S – Survivorship Estate – including joint tenancies, tenancies by entirety, joint bank account & surviving bank account (if created on or after 1sept 1966)
(a) With 3rd parties, included to the extent of decedent’s contributions
(b) Before marriage: ½ may be included
(c) With surviving spouse ½
L – Life time transfers with strings attached:
- transfers where the T retains the power to revoke, invade, consume or dispose of the principal or name new B AND
- Transfers (irrevocable) made during the marriage, where the T retains a life estate (if irrevocable transferred on or after 1sept 1992)
E – Employee pension, profit-sharing & deferred compensation plans (if T designated the B of the plan on or after 1sept 1992)
NOTE – If the plan is called a “qualified plan” only ½ is a T-sub regardless of B
G – Gifts made within one year of death:
- Gifts in excess of $14,000 (the annual gift tax exclusion AND
- Gift cause mortis – gifts made in fear of pending death (regardless of the amount)
U – U.S. government bonds and other P.O.D (pay on death) arrangements
P – Powers of appointment: property over with T held a presently exercisable general power of appointment.
NOTE – GENERALLY IF T HAS AN INTEREST IN THE PROPERTY, SHE CAN TOUCH IT/MANIPULATE IT IT IS GOING TO BE A T SUB.
- Not Testamentary Substitutes
Acronym – LOGPIT
L – Life insurance: whether payable to the surviving spouse or a third party
O – One half (1/2) of a qualified pension & profit-sharing B (if T named B before 1sept 2092, and did not change B thereafter)
G- Gifts of less than $14,000 made within one year of death (except gift of causa mortis)
P – Pre-marriage irrevocable transfers
I – Irrevocable transfers made more than 1 year before death: transfers where the T did not retain the power to revoke, invade, consume, or dispose of the principal or name a new B.
T – Transfers (irrevocable )made during the marriage, where the T retains a life estate (if irrevocably transferred before 1sept 1992) CHECK THIS ONE – THIS MIGHT NEED TO BE CROSSED OUT?
NOTE – GENERALLY IF T DOES NOT HAVE AN INTEREST, CANNOT MANIPULATE, CHANGE IT ETC IT’S NOT A T-SUB
MAJOR EXCEPTION – Life insurance
- Calculating the elective share estate:
GENERALLY THE FULL VALUE COMES IN ON THE T-SUB OF A TESTAMENTARY SUB IS INCLUDED, EXCEPT:
- surviving estates involves the T and a 3rd party – the consideration furnished test applied, this means the surviving spouse has the burden of proving the amount of the dead spouse contribution to the asset. How much is the dead’s spouses? FULL VALUE
- Survivorship estate involves the T and the surviving spouse: Half is a T-sub, no consideration furnished test.
CHECK PAGES – 67-74 for examples
- Survivorship estates CREATED BEFORE MARRIAGE involving T and 3rd party – the consideration furnished test applies but, only half of the property value is a T-sub because pre-marriage gifts are not T-sub (the same applies to joint bank account, to the extent that deposits were made before the marriage) HALF
- Elective share trust do not satisfy the surviving spouse’s right of election
- T who dies before sept 1 1994, could defeat the right of elective share trust that gave the surviving spouse a life estate, as long as she was given at least $50,000 outright, if the sum of the outright disposition $50,000 AND THE PRINCIPAL OF THE TRUST EQUALLED or exceeded the 1/3 elective share amount, then surviving spouse had no right of election.
- For estates of decedents dying on or after 1sept 1994, a life estate will not satisfy the surviving spouse.
NOTE – the date of T’s death, not the date of his will was executed is controlling.
- Effect on the trust if the surviving spouse files for an elective share – you read the trust as if the surviving spouse predeceased T, as if there is no life estate in the surviving spouse and accelerate to the remainder man.
Elective share quick formula
Net probate estate/intestate estate
+ T-subs (full value) (e.g. Totten trust)
+ T-subs with surviving spouse (1/2 in)
+ T-subs with 3P (CONSIDERATION FURNISHED)
1/3 of elective share estate = Elective share amount
Is the surviving spouse satisfied?
Elective share amount
- Amount surviving spouse receives under will or via intestacy
- T- subs with surviving spouse (1/2 out)
REMEMBER – If the surviving spouse is not fully satisfied all other B’s contribute pro-rata.
- Procedural rules governing Elective share
- If the estate is admitted to probate – the surviving spouse notice of election must be filed within 6 months after letters are issued by the surrogate’s court at the start of the probate proceedings.
- If these is no estate administration – the notice of election must be filed no more than 2 years after the T’s death.
- Personal Right – personal to the surviving spouse, not heirs.
- Waiver: The right of election can be waived with or without consideration in a writing signed and acknowledged before a notary public (e.g. in a pre-marital agreement)
- Before or after marriage and
- as to a particular will or testamentary sub, or as to all wills and testamentary subs in general
REMEMBER – An explicit waiver of all rights in the T’s estate waives the surviving spouse right to elective share & intestate share but not specific gifts under T’s will. There must be an explicit waiver of such bequests including “except property”
- Multi jurisdiction Problems
- Only a spouse domicile in NY at the time of his death has a right of election.
- Exception – The surviving spouse can claim an elective share with regard to T’s real property in NY, if T expressly states in his will that the disposition of that property is to be governed by NY law.
- Otherwise – T will is admitted to probate & his entire estate is administered in his state of domicile but “ancillary administration proceedings” will be required in NY to clear title of NY property.
- Exempt Property
- There are item which the surviving spouse gets first or of the top, before you do anything figure out elective share, even sometimes creditors etc.
- EXEMPT PERSONAL PROPERTY SET-ASIDE: in addition to the elective share the surviving spouse is entitled to exempt personal property up to $92,500 in value.
- One car (up to $25,000 in value)
- b. furniture, appliances, electronics etc (up to $20,000 in value)
- Cash allowances (up to $25,000) (not subject to creditor’s claims, other than claims for funeral expenses)
NOTE – HAVE TO GIVE BACK TO THE ESTATE IF IT’S MORE.
- animals, farm machine, tractors etc ( up to £20,000) and
- books, dvd, cds, software etc ( up to $2,500)
Exam tip – In any q involving surviving spouse, mention the exempt personal property set-aside.
NOTE – If there is no surviving spouse, it will go to the children
- Circumstances disqualifying spouse from taking elective share
Acronym – DISMAL (as in intestacy)
D – Divorce
I – Invalid divorce/annulment –procured by surviving spouse
S- Separation decree (NOT AGREEMENT)- rendered against the surviving spouse.
M – Marriage is void
AL- Abandonment and Lack of support – by the surviving spouse
POWERS OF APPOINTMENT
- Donor – the creator of the power
- Donee – the person who is given the power to use
- Power of appointment – authority created in (or reserved by) a donee enabling to take donor’s property & the manner in which they take it.
NOTE – when a person reserves the power in herself, she is both donee and donor of the power
- There are persons who take the property if the donee fails to correctly exercise the power.
- Purpose of power appointment – at a later date for distribution of property looking into future.
- Classification of powers
- General power of appointment – means a donee can appoint herself, her creditors or her estate, as if she owned the property herself.
- Special power of appointment (limited power of appointment) – donee cannot appoint to herself, typically there is a limited class to who the donee can appoint.
- Presently exercisable power of appointment – the donee can exercise its right now in her lifetime.
- Testamentary power of appointment – the donee can appoint only by will.
- Powers of Appointment and elective share
- General presently exercisable power of appointment -is a T-sub because can appoint to herself, 3rd party, spouse etc.
- General testamentary power of appointment – Not a t-sub because she can’t get to the trust property during her lifetime & the property was not hers to begin with.
- Special powers of appointment – Not a t-sub, she can’t get to it during her lifetime, and it is not hers
- The donee’s creditors’ rights to the donor’s property.
- General presently exercisable power of appointment – Yes creditors can get to it, same as elective share, if she can get to the asset e.g. if she owned it, then creditors can get to them as well.
- General testamentary power of appointment – Not except if:
- Is he was the donor & donee and gave to herself
- she exercises it in favour of her estate.
- Special powers of appointment – No, she can’t get the assets can’t appoint to herself, limited to special class, therefore creditors can’t get it.
POWERS OF APPOINTMENT AND RAP
- Deals with vesting only
- it must vest within lives in being at the time of the grant (LIB) PLUS 21 YEARS.
- LOOK to ensure there is no way that vesting could occur outside the perpetuities period.
- Suspension Rule
- Deals with the possible suspension of the ability to transfer a fee simple.
- there must be identified persons which together, convey a fee simple absolute within LIB PLUS 21 YEARS.
- Statutory spendthrift rule – income beneficiaries cannot assign or convey their income interest.
REMEMBER – NY Perpetuities reform statute saves gifts from RAP and Suspension rule violation by reducing age contingencies to 21 years.
- Powers to appoint: Remainder interests
- First; Identify the type of power of appointment
- Second: is the power itself valid? To be valid, a special or general testamentary power of appointment must be certain to exercise within LIB plus 21 years.
- Third; are the interest created by the power valid? To be valid, interest created by the exercise of a special power of appointment or a general testamentary power of appointment are measured from the date of the instrument creating the power, not the date of the power exercised.
If the remainder interest violates rap and the suspension rule – we are added by second look doctrine/ wait and see – what happens at the time power of appointment is exercised, we filling the blanks looking at facts when donee exercises the power.
Look at pages 83-89 for very good examples & variations
RAP AND SUSPENSION RULE CHECKLIST
- Identify the interest
- Determine whether you are measuring from date of creation or date of exercise
- Determine whether the second look doctrine applies
- Give the RAP RULE
- Find LIB and run with it
- Most likely apply the NY reform statute
- Give the suspension rule
- Look to see if there is an income interest in an unborn beneficiary, and state that the income interest is void OR
- Go further by giving the Statutory Spendthrift rule, and state that the income interest is void (might be saved by NY reform statute)
- Don’t forget to deal with the remainder interest.
- Mistake – absent suspicious circumstances, it is conclusively presumed that T read the will and intended its consequences, thus plain meaning of the will, cannot introduce extrinsic evidence.
- a. Latent Ambiguity – a miss-description, the error not evident by looking at the will.
- Extrinsic Evidence – admissible to clarify or find the meaning of T’s word
- Facts and circumstances evidence
- Evidence of the T’s declarations of intent to3rd parties
iii. Evidence of T’s statements to the attorney who prepared the will is admissible.
- If extrinsic evidence does not cure the ambiguity: then the gift fails because there is no ascertainable beneficiary.
- a. Patent Ambiguity –an obvious error on the face of the will.
- Extrinsic Evidence – admissible
- Facts and circumstances evidence – admissible
- Evidence of T’s declaration of intent to 3rd parties in NOT admissible because we won’t allow this to contradict T
iii. Evidence of the t’s statements to the attorney who prepared the will admissible.
- Conditional Wills
- It’s a will that expressly provides that it will operative if some condition is met.
- On the Bar argue both ways – unless see example on P91
- Contract to make a will
- Joint will – A will of 2 people in one document.
- A contract to make a will or not to revoke a will can only establish by an express statement of an intent that the wills provisions are intended to constitute a contract between the parties.
NOTE – Court will not find that a contract of non-revocation was intended merely from using words we, us, our in making disposition of the combined estates.
- If a joint will is a contractual will and the surviving breaches the contract by executing a later will with inconsistent provisions:
Step 1 - Probate second will even though the 1st will was written as contract
Step 2 – Impose a constructive trust in favour of the intended beneficiaries of the 1st will.
Why? Because you may have other assets in will 2 that are not mentioned in will 1, that are going to the other beneficiaries, but you still keep a contract to the 1st guys.
- Testamentary Capacity
- T must have sufficient capacity to:
- understand the nature of the act
- he needs to know the nature & approximate value of his property
- he must know his family and loved ones
- he needs to understand the gifts he was making.
- Case Law Application
- 6 months before she executed her will, T was adjudicated incompetent and a guardian was appointed to manage her affairs.
- Court ruling – could find that T has executed the will at loosest interval (knew what he was doing he made the will, had the 4 things things)
- Insane Delusion – T is generally of sound mind, but has a persistent belief in supposed facts that are against all evidence, probability and control which cause or effect T testamentary act.
- Undue Influence – T has testamentary capacity but is subject to, and controlled by, a dominant influence of power.
- The will contestant has the burden of proving:
- The existence and exertion of the influence
- and the effect of such influence to overpower the mind and the will of T
iii. The product is a will or even a gift in the will that would have not happened but for that influence.
- Evidence of Undue influence – is usually circumstantial, these situations alone are insufficient to constitute undue influence:
- The opportunity to add influence (e.g. lived with T)
- Ability to influence because of age or disability.
iii. Unequal disposition
- Inference of undue influence – a will contestant can satisfy his burden of proof by an inference of undue influence if:
- A will makes a gift to one in a confidential relationship AND
- the person was active in preparing the will
UNLESS the inference is rebutted.
- Bequests to drafting attorney – even if no objection is filed, the Surrogates court automatically inquires into whether a bequest to the drafting attorney was voluntarily made (known as the Putnam scrutiny)
- Appointments of drafting attorney:
Under New York Law – a drafting attorney who is named as executor of the T’s estate must give written disclosure to the T that:
- any person can be named as executor, does not have to be an attorney
- the executor receives a statutory commission set by statute AND
iii. The attorney is also entitled to legal fees for representing the estate.
- T/client must sign the written disclosure in the presence of 2 witnesses
- IF the drafting attorney FAILS to comply with the statute, the attorney would receive half of the statutory commissions.
- No-contest (in terrorem) clauses
- A clause in the will that says if anyone objects in the will, they will get nothing.
- In most states – no-contest clauses are given full effect, unless the court finds that the contest was brought in good faith and with probable cause.
- New York – the clause is given full effect even if there was a probable cause to challenge the will.
- Exception to the New York Rule
- Forgery or that the will was revoked by a later will (if the surrogates court finds that there was probable cause for the contest)
NOTE –not applied if the will contest is on the ground that T’s will was revoked by physical act
- or is filed on behalf of an infant or incompetent
- or a construction proceedings to construe the will
- objection to the jurisdiction of the court
- Safe harbor provisions – a person who is considering contesting a will that contains a no-contest clause may examine in discovery:
- Person who prepared the will
- the attesting witnesses
- the will proponents and
- the nominated executors
NOTE – BUT a non-contest clause can be drafted to preclude these provisions
POWERS OF ATTORNEY, HEALTH CARE PROXIES AND LIVING WILLS
- Power of attorney – a written a authorisation for an agent (attorney-in-fact) to act on behalf of the grantor of the power. They may be generator specific, with as many variations as the drafter of the power wishes to contrive under the circumstances.
- Non-durable power of attorney – a power of attorney that is revoked by operation of law, by either the grantor’s death or incapacity. The power of attorney remains valid until notice of the death or disability is received by the attorney-in-fact.
- Durable Power of attorney – a power of attorney that extends beyond the grantor’s incapacity unless it has specific language that is terminated by the grantors incapacity.
- Health care proxies – is a type of durable power of attorney that appoints an agent to make health care decisions on behalf of the grantor. It does not become effective until the grantor becomes incapacitated, and it remains effective despite the incapacity. A health care proxy must be
- in writing
- Signed – by the grantor or another at his direction
iii. Witnessed by at least 2 adults.
The health care proxy must state that the grantor appeared to execute the proxy free from duress.
- Living wills – generally states an individual’s desires, should he become terminally ill or be in persistent vegetative state, regarding whether to administer, withhold or withdraw
- life sustaining procedures
- Artificial nutrition or hydration
iii. Treatment to alleviate pain
NY – HAS held that a patient’s right to decline treatment is guaranteed by the common law.