Chapter 51

 

 

 

 

 

 

 

Wills, Trusts, and Elder Law

 

p  See Separate Lecture Outline System

 

Introduction

 

      This chapter is concerned with the law related to wills and trusts.  On death, title to a decedent’s prop­erty must vest in someone.  A decedent can direct the passage of property after death by will, subject to certain limitations imposed by the state.  If no valid will has been executed, state law prescribes the distribution of property.  If no heirs or kin can be found, the property escheats.  Property can also be transferred through a trust.  These are all part of estate planning, which can also involve the considerations in the section titled “Elder Law.”

 

 

Chapter Outline

 

I.   Wills

      The text explains that the property of a person who dies intestate, and without heirs, passes to the state.  It is also explained that a will must follow exactly the requirements of the appropriate state’s statutes to be effective.  Various appropriate terms are defined (testator, legacy, etc.).  Besides distribu­ting property, a will can appoint a guardian and a personal representative.

 

A.  Laws Governing Wills

    In the text, it is mentioned that the Uniform Probate Code (UPC) has been adopted in about a third of the states.  It is acknowledged, however, that state laws vary widely.

 

B.  Gifts by Will

    It is explained that gifts may be specific or general.  The text briefly discusses abatement, lapsed legacies, and residuary clauses.

 

C.  Requirements for a Valid Will

 

1.  Testamentary Capacity

    A testator must be of legal age (usually eighteen) and sound mind at the time a will is made.  The elements for a general test for capacity are listed in the text—intent and comprehension during a lucid interval are probably the key elements.  If a decedent’s plan of distribution was the result of improper pressure by another person overriding the maker’s intent, the will is invalid.  Undue influence may be inferred when relatives are overlooked in favor of a sole, nonrelative beneficiary who was in a po­sition to influence the making of the will. 

 

 

Case Synopsis—

 

Case 51.1: In re Estate of Klauzer

 

   John Klauzer’s will disposed of the majority of his estate in a residuary clause that named each of various relatives and friends as individuals followed by their relationship to the testator.  The clause provided that they should receive his property “in equal shares, share and share alike.  That should any of the individuals above named predecease me, then their share of my estate shall go to their [descendant­s] surviving.”  The court ordered the estate distributed in sixteen equal shares.  Frank, John’s brother and the estate’s personal representative, appealed, arguing that the property should be divided into fourteen equal shares, with John’s married friends taking only one share per couple.

 

   The South Dakota Supreme Court affirmed.  The language of the will evidenced John’s intent re­garding the distribution of his property in sixteen equal shares.  “First, John refers to his friends as individuals.  Second, he requests that they receive his property ‘in equal shares, share and share alike.’  Third, he states that if one individual predeceases him, his or her share ‘shall go to their [de­scendants] surviving.’ .  .  . We determine that the testator’s intent is clearly expressed within the four corners of the document.  We are bound by the unambiguous language of the will.”

 

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Notes and Questions

 

   The court concluded that outside evidence was not needed, in this case, to prove the testator’s in­tent.  If the court had considered extrinsic evidence, however, what would it have considered and how would it have weighed in the balance?  The court stated that “even the extrinsic evidence supports our decision.  Compare the language used by John in his prior will, which was executed in 1985: ‘I. To my friends, Douglas and Fern Olson, of Newell, South Dakota, or the survivor of them, if either prede­cease me. .  .  . J. To my friends, William or Shirley Hollister, of Redig, South Dakota, or the survivor of them, if either predece [a] ses me. .  .  .’  It is undisputed that John, in his 1985 will, treated these married parties as one unit and not as individuals. If John intended to continue treating the married parties as one unit, he could have used the same language.  However, John materially altered the language in his 1990 will.  He changed the word ‘or’ to ‘and’ indicating an intention that each spouse be treated individually.  He also provided both the first and last name of each spouse, rather than both of the spouses’ first names and only one last name.  He also eliminated the words ‘or the survivor of them,’ all of which supports the argument that he intended to give each of them an equal share in­stead of treating the married couple as a unit, as he did in 1985.”

 

 

 

Additional Cases Addressing this Issue —

 

   Recent cases determining the testator’s intent include the following.

 

•  In re Estate of Wright, 829 So.2d 1274 (Miss.App. 2002) (the testator’s nephew was the intended beneficiary of the settlement proceeds of a lawsuit initiated by the testator, who, when she made her will, was aware of the occurrence on her property that precipitated the suit and bequeathed her inter­est in the property to the nephew without amending the will to direct any payments in the suit to someone other than the nephew).

 

•  Painter v. Coleman, 211 W.Va. 451, 566 S.E.2d 588 (2002) (rejecting the language in a will was nec­essary to give effect to the testator’s intent when a spouse deleted a clause that would have devised her estate to her spouse in case of their simultaneous deaths—the other spouse had already died—and that deletion would have forced the entire estate to pass intestate, which was not the surviving spouse’s intent).

 

 

2.  Writing, Signature, Witness, and Publication Requirements

    A written document is generally required, though it can be informal.  In some cases, an oral will, such as a nuncupative will, is valid, particularly if made during the last illness of the testator.  If a will is in writing, the testator must sign it.  Intent is the key as to whether a particular mark is a signature.

 

    Two, and sometimes three, witnesses are required.  The number, their qualifications, and the manner in which witnessing must be done varies.  Some states (though not the UPC) prohibit interested parties from witnessing.  A witness does not have to read the will.  Some­times, witnesses must sign in the sight or presence of each other, but the UPC requires only that the testator acknowledge his or her signature to the witnesses [UPC 2–502].  Some states require a testator to declare to the witnesses that the will is his or her “last will or tes­tament.”

 

 

Additional Background—

 

Harmless Errors under the UPC

 

   To allow a probate court to excuse a harmless error in complying with the technical require­ments for executing or revoking a will, the UPC was revised in 1990.  The following is the section that reflects that revision.

 

ARTICLE II.  INTESTACY, WILLS, AND DONATIVE TRANSFERS (1990)

PART 5.  WILLS, WILL CONTRACTS, AND CUSTODY AND DEPOSIT OF WILLS

 

§ 2–503. Writings Intended as Wills, etc.

 

Although a document or writing added upon a document was not executed in compliance with Section 2–502, the document or writing is treated as if it had been executed in compliance with that section if the proponent of the document or writing establishes by clear and convincing evidence that the dece­dent in­tended the document or writing to constitute (i) the decedent’s will, (ii) a partial or complete re­vocation of the will, (iii) an addition to or an alteration of the will, or (iv) a partial or complete revival of his [or her] formerly revoked will or of a formerly revoked portion of the will.

 

 

D.  Revocation of Wills

 

1.  By a Physical Act of the Maker

    A testator may revoke a will by intentionally burning, tearing, canceling, obliterat­ing, or de­stroying it or by having someone else do so in the presence of the maker and at the maker’s direction.  In some states, partial revocation is recognized.  Of course, where provided, statu­torily prescribed methods must be followed precisely.

 

2.  By a Subsequent Writing

    A codicil can amend or revoke provisions in a will.  A new will may (or may not) revoke a prior will, depending on the language (the text provides an example).  If an express declara­tion of revocation is missing, the wills are read together; if there are inconsistent disposi­tions, the second will controls.

 

3.  By Operation of Law

    A marriage, divorce or annulment, or the birth of children after a will has been executed generally revokes the will (at least as regards the new spouse, ex-spouse, or new children).  The text spells out the details.  Generally, depending on the testator’s intent and applicable state law, a new spouse and new children get intestate shares, and an ex-spouse gets noth­ing.

 

E.  Rights under a Will

    The text notes that there are limits on the way a person can dispose of property in a will, providing a spouse’s elective share as an example.  State statutes provide methods by which a surviving spouse can renounce his or her gift by will and take an elective share (to obtain whichever is most advantageous).

 

 

Additional Background—

 

Elective Share under the Revised UPC

 

   The following is the section of the re­vised (1990) UPC that adjusted the amount of a surviving spouse’s elective share to relate to the number of years that he or she had been married to the decedent. 

 

ARTICLE II.  INTESTACY, WILLS, AND DONATIVE TRANSFERS (1990)

PART 2.  ELECTIVE SHARE OF SURVIVING SPOUSE

 

§ 2–202. Elective Share.

 

(a) [Elective-Share Amount.]  The surviving spouse of a decedent who dies domiciled in this State has a right of election, under the limitations and conditions stated in this Part, to take an elective-share amount equal to the value of the elective-share percentage of the augmented estate, determined by the length of time the spouse and the decedent were married to each other, in accordance with the follow­ing schedule:

 

If the decedent and the spouse were mar­ried to each other:

The elective-share percentage is:

Less than 1 year

Supplemental Amount Only.

1 year but less than 2 years

3% of the augmented estate.

2 years but less than 3 years

6% of the augmented estate.

3 years but less than 4 years

9% of the augmented estate.

4 years but less than 5 years

12% of the augmented estate.

5 years but less than 6 years

15% of the augmented estate.

6 years but less than 7 years

18% of the augmented estate.

7 years but less than 8 years

21% of the augmented estate.

8 years but less than 9 years

24% of the augmented estate.

9 years but less than 10 years

27% of the augmented estate.

10 years but less than 11 years

30% of the augmented estate.

11 years but less than 12 years

34% of the augmented estate.

12 years but less than 13 years

38% of the augmented estate.

13 years but less than 14 years

42% of the augmented estate.

14 years but less than 15 years

 46% of the augmented estate.

15 years or more

50% of the augmented estate.

 

(b) [Supplemental Elective-Share Amount.]  If the sum of the amounts described in Sections 2–207, 2–209(a)(1), and that part of the elective-share amount payable from the decedent’s probate estate and nonprobate transfers to others under Section 2–209(b) and (c) is less than [$50,000], the surviving spouse is entitled to a supplemental elective-share amount equal to [$50,000], minus the sum of the amounts described in those sections.  The supplemental elective- share amount is payable from the de­cedent’s probate estate and from recipients of the decedent’s nonprobate transfers to others in the or­der of priority set forth in Section 2–209(b) and (c).

 

 (c) [Effect of Election on Statutory Benefits.]  If the right of election is exercised by or on behalf of the sur­viving spouse, the surviving spouse’s homestead allowance, exempt property, and family al­low­ance, if any, are not charged against but are in addition to the elective-share and supplemental elec­tive-share amounts.

 

(d) [Non-Domiciliary.]  The right, if any, of the surviving spouse of a decedent who dies domiciled out­side this State to take an elective share in property in this State is governed by the law of the decedent’s domicile at death.

 

 

F.  Probate Procedures

    The assets of small estates can often be distributed without formal probate.  Title to cars, bank ac­counts, and other property can sometimes be passed merely by filling out forms, particularly when it is held in joint tenancy or there is only one heir.  Once a will is admitted to probate, family members can settle among themselves the distribution of a decedent’s assets, although a court order is needed to protect the estate from future creditors and to clear title.

 

    For large estates, or when trusts are set up by will, formal probate is required.  A court supervises every aspect of the settlement.  The process can be long and expensive.

 

G.  Property Transfers outside the Probate Process

    The text refers to living trusts, joint ownership of property, gifts while one is still living, and life insurance.

    

 

Case Synopsis—

 

Case 51.2: Bielat v. Bielat

 

   In 1983, Chester Bielat opened an IRA and named his sister Stella as beneficiary.  Later, Chester executed a will that gave all of his property to his wife Dorothy.  In 1993, Ohio enacted its version of the Uniform Transfer‑on‑Death Security Registration Act, under which IRA beneficiary designations were exempted from the formalities that apply to testamentary dispositions.  The act applied to regis­trations in beneficiary form made “prior to, on, or after the effective date of this section.”  After Chester’s death, Dorothy filed a complaint in an Ohio state court against Stella, claiming the IRA.  She argued in part that because the state constitution prohibited the legislature from passing retroac­tive laws and protected “vested rights,” the act did not apply to Chester’s IRA beneficiary clause.  Dorothy asked the court to apply the law in effect when Chester executed his will.  The court dismissed the complaint.  Dorothy appealed.

 

   The Ohio Supreme Court affirmed.  “Dorothy cannot claim a vested right to the proceeds of the IRA under the law of contracts, for she was in no way connected to the IRA Adoption Agreement that Mr. Bielat executed .  .  . .  Dorothy was not a party to the 1983 IRA Agreement, nor was she a third‑party beneficiary or assignee of Stella’s contingent rights as a designated beneficiary of the account balance. .  .  . The IRA Adoption Agreement created no rights or obligations for Dorothy.  Dorothy thus had no vested contractual right impaired by the retroactive application of the disputed statutes; she had no contractual rights to impair.”  As for Dorothy’s other argument, “we are not interpreting Chester’s will in this case.”

 

 

II.  Intestacy Laws

      Intestacy statutes set out rules and priorities under which “natural” heirs inherit property (after es­tate debts are paid).  The rules vary widely from state to state.

 

A.  Surviving Spouse and Children

    A surviving spouse is usually entitled to a share of an es­tate—the entire estate if there are no children or grandchildren, one-half if there is one surviving child, and one-third if there are two or more children.  If there is no surviving spouse or child, an estate passes to lineal descendants (in the order of grandchildren and parents) or, if none, collateral heirs (brothers and sis­ters, nieces, nephews, aunts, and uncles). 

 

B.  Stepchildren, Adopted Children, and Illegitimate Children

    Legally adopted children are heirs; stepchildren are not.  An illegitimate child is the mother’s heir, but not the father’s, unless paternity is established before death.

 

C.  Distribution to Grandchildren

    The text explains per stirpes and per capita distribution in the context of children surviving their parents and grandparents, with a grandparent as testator.  Per capita is probably the preferred method.

 

III. Trusts

      A trust involves any arrangement by which legal title to property is transferred from one person to be administered by a trustee for another person’s benefit.  The elements of a valid trust are listed in the text, and an example and illustration are provided.

 

A.  Express Trusts

    The text divides express trusts into two categories:  living and testamentary trusts.  A living trust is executed by a grantor during his or her lifetime.  A testamentary trust is created by will on the settlor’s death (if the will is invalid, the trust is invalid).  A charitable trust (designed to benefit part of all of the public) must be created for a charitable, educational, religious, or scientific pur­pose.  A spendthrift trust prevents a beneficiary’s using trust funds improvidentially by limiting the beneficiary’s draw on trust funds and transfer of the right to future payments.  A Totten trust is created when one person deposits money in his or her own name in trust for another. 

 

B.  Implied Trusts

    The text discusses two types of implied trusts: constructive and resulting trusts.  A resulting trust arises from the conduct of the parties.  A constructive trust is an equitable remedy that en­ables plaintiffs to recover property (and sometimes damages) from defen­dants who would other­wise be unjustly enriched.  The text provides examples. 

 

 

Case Synopsis—

 

Case 51.3: Nagle v. Nagle

 

    James and Mary Nagle were married in 1942,and had seven children including sons Gary and Robert. In the 1970s, in Pennsylvania, they bought a business that they incorporated and continued as “James Nagle’s Rebuilt Truck Parts and Sales.” After James and Mary separated, James moved to Maryland into a house owned by the firm. In 1994, Mary filed a suit in a Pennsylvania state court against James, seeking a divorce and an equitable distribution of their property. In 1995, James trans­ferred his corporate stock, which represented a majority interest in the company, to Gary, who worked for the firm. The court determined that James continued to control the corporate assets, and imposed a constructive trust on the stock, for which Gary was ordered to pay, with the proceeds to be distributed equally to James and Mary. Gary appealed.

 

    A state intermediate appellate court affirmed. Gary argues “that the transfers were made pursu­ant to a valid estate plan. *  *  * However, it is clear that Husband transferred Wife’s interest pursuant to this estate plan without her consent. *  *  * Appellant also suggests that there was adequate consid­eration for the transfer because he worked for the Corporation. Appellant ignores the fact that he was paid a salary for this work” and that Robert, also working for the corporation, received none of the stock. As for James’s control, after the transfer, he “was permitted to write checks to himself, *  *  * he lived on real estate owned by the Corporation, and *  *  * he regularly was paid for a ‘loan’ that he never actually made.”

 

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Notes and Questions

 

   The court concluded that the price of the stock, which represented an 80-percent ownership share in the corporation, was $281,600 at the time of the transfer, the worth of the land on which the business was located was $271,000, and the value of the firm’s inventory was $2 million. Was the court’s imposi­tion of a constructive trust only on the stock justified? Yes, according to the appellate court. “The di­vorce court gave a value to the stock that is designed to achieve economic justice in this action. The achievement of economic justice is, in the end, the goal of the Divorce Code. Herein, the court dis­counted the value of the business significantly. Eighty percent of this business was valued at $281,600. However, the divorce court refused to give Wife any monetary award for the $2,000,000 in inventory, which was acquired by post-separation efforts of Husband and Appellant, held by the business at the time of distribution. Appellant now owns $2,000,000 in used-parts inventory transferred to him by his father. Appellant can hardly complain that his efforts were not rewarded.” The court added, “In mak­ing this observation, we do not mean to suggest that there was error in this regard. Rather, this fact is set forth merely to demonstrate that Appellant’s main complaint, which is that his years of effort in building the value of the business have gone unrewarded, is without merit.”

 

 

 

Additional Cases Addressing this Issue —

 

   Recent cases involving constructive trusts include the following.

 

•  In re JD Services, Inc., 284 Bankr. 292 (2002) (a depositor was unjustly enriched in the amount of $717,750 when, due to an encoding error in connection with a $7,250 deposit, the larger amount was posted to the depositor's account and the depositor transferred the funds to its account at another bank, and thus the depositor held these funds subject to a constructive trust in favor of the first bank).

 

•  Castano v. Wells Fargo Bank, N.A., 82 S.W.3d 40 (Tex.App.—San Antonio 2002) (an account holder, who obtained cashier checks in the exact amount of wire transfers that erroneously trans­ferred funds into his account, held the funds in a constructive trust for the original owner).

 

•  Tauber v. Commissionner ex rel. Kilgore, 263 Va. 520, 562 S.E.2d 118 (2002) (transactions involving the assets of a non-profit corporation that were transferred to a for-profit corporation after the non-profit corporation's charter was revoked established that the rents, profits, and other sums accruing to the entities from the leases and transfers of the assets were subject to a constructive trust).

 

 

C.  The Trustee

    The legal responsibilities of a trustees are generally the same in all trusts:  preserve the trust property, make it productive, and typically pay the income to the beneficiaries.  The text covers some of the details (the trustee’s duties to act in good faith, exercise reasonable care, and keep ac­curate books, the trustee’s powers to do whatever the settlor says (subject to state law concerning the investment of trust funds), and the allocation of expenses between principal and income).  A trust terminates when it says it does, when its terms have been fulfilled, or when it is impossible to continue.

 

D.  Trust Termination

    A trust terminates when it says it does, when its terms have been fulfilled, or when it is impossi­ble to continue.

 

IV.  Estate Administration

      The text reviews the rules and procedures for administering an estate: locating the will, collecting and inventorying assets, settling debts, and distributing the remaining assets.  Of course, these vary from state to state.  A court oversees the process. 

 

A.  Duties of the Personal Representative

    A personal representative must post a bond (unless the will specifies otherwise) and has a duty not to waste the assets during the administration.  The representative has a fiduciary duty to act in the best interests of the estate.

 

B.  Estate and Inheritance Taxes

    The text explains briefly that at the federal level, a tax is levied on the total value of the estate, after debts, expenses for administration, and various exemptions.  The tax is on the estate, not on the beneficiaries.  The lowest rates and largest exemptions apply to a surviving spouse and children.  State in­heritance taxes are imposed on the recipient of a bequest rather than on the estate (higher for more distant relations).  Some states also have an estate tax similar to the federal tax.

 

C.  Distribution of Assets

    After the assets are distributed, an accounting is rendered to the court, and the estate is closed, the personal representative has no more responsibility or liability for the estate.

 

V.   Elder Law

 

A.  Planning for Disability

    Techniques to protect against the loss of assets on future disability include a durable power of at­torney (authorizing a per­son to act on behalf of another who is incompetent), a health-care power of attorney (authorizing an­other to choose medical treatment for a person who is unable to make the choice), and a living will (stating the extent to which a person wants to be subjected to life-sav­ing procedures).

 

B.  Medicaid Planning

    In anticipation of the cost of long-term care, persons sometimes plan to meet the requirements of Medicaid so their assets can go to others.  The text provides examples.

 

Teaching Suggestions

 

1. Ask students if they have ever made a will.  What were some of the concerns that prompted them to make a will?  Do single persons without children need a will?

 

2. Ask students to discuss why the requirements for executing valid wills are so strict in most states.  Are these standards prompted by fears of fraud?  Should these standards be relaxed so that those who fail, for one reason or another, to comply with a particular statutory requirement, will not have their wills invali­dated?

 

3. Ask students to discuss the various techniques for estate planning—which are most advantageous in what types of situations—and to put together estate plans of their own.  This could help underscore that estate plans must be continually reviewed and revised to be sure they meet the needs of those for whom they are de­signed.  What circumstances, other than divorce, could affect who takes what under a will, or by some other estate planning technique?  Are taxes the only consideration?

 

4. Bring to class various will forms, trust forms, and forms for the documents discussed in the elder law section, and discuss their provisions and effects, particularly in your jurisdiction.

 

Cyberlaw Link

 

   What effect might the Web have on the uniformity of wills and other estate planning documents discussed in this chapter?  How might the existence of the Internet affect the management of a trust?

 

 

 

Discussion Questions

 

1.    What is a will?  A will is the final declaration of the disposition that a person desires to have made of his or her property after death.  A will is referred to as a testamentary disposition of property.  It is a formal in­strument that must follow exactly the requirements of the appropriate state’s statutes to be effective.  A will becomes effective only upon the death of the testator.

 

2.    How does a specific devise or bequest differ from a general devise or bequest?  A specific devise de­scribes particular property—such as a gold watch or a diamond ring—that can be distinguished from all the rest of the testator’s property.  If the particular item is not in the testator’s estate at the time of his or her death, the devise will be extinguished or canceled.  A general devise, by contrast, does not single out any par­tic­ular item of property to be transferred by will but usually consists of a sum of money. 

 

3.    What is the purpose of a residuary clause?  A will may provide that any assets remaining after specific gifts are made and debts are paid are to be distributed through a residuary clause.  Such a clause is used be­cause the exact amount to be distributed cannot be determined until all other gifts and payouts are made.  Problems can arise, however, when the will does not specifically name the beneficiaries to receive the residue.  If it is impossible for the court to determine the intentions of the testator, the residue will pass according to state laws of intestacy.

 

4.    What are the three requirements that must be satisfied in order for a testator to demonstrate his or her testamentary capacity?  The testator must (1) comprehend and remember the “natural objects of his or her bounty” (usually family members and persons for whom the testator has affection); (2) comprehend the kind and character of the property being distributed; and (3) understand and formulate a plan for disposing of the property. 

 

5.    What are the four basic requirements for a valid will?  A will (1) must be in writing; (2) signed by the testator; (3) witnessed by two or three witnesses; and (4) published (declared by the testator to the witnesses that the document they are about to sign is his or her “last will and testament”).

 

6.    What is a codicil?  A codicil is a written instrument separate from the will that amends or revokes pro­visions in the will.  It eliminates the necessity of redrafting an entire will merely to add to it or amend it.  A codicil can also be used to revoke an entire will.  The codicil must be executed with the same formalities re­quired for a will and must expressly refer to the will.

 

7.    What four elements must be present to create a valid trust?  A valid trust must include (1) a des­ignated beneficiary; (2) a designated trustee; (3) a fund sufficiently identified to enable title to pass to the trustee; and (4) actual delivery of the property to the trustee with the intention of passing title.

 

8.    How does a living trust differ from a testamentary trust?  A living trust is a trust ex­ecuted by a grantor during his or her lifetime.  The grantor executes a “trust deed,” and legal title to the trust property passes to the named trustee.  The trustee has a duty to administer the property as directed by the grantor for the benefit and in the interest of the beneficiaries.  A testamentary trust, by contrast, is a trust cre­ated by will to come into existence upon the settlor’s death.  Although a testamentary trust has a trustee who maintains legal title to the trust property, the actions of the trustee are subject to judicial approval.  If the will setting up a testa­mentary trust is invalid, then the trust will also be invalid and the designated trust property will then pass according to intestacy laws. 

 

9.    What is a constructive trust?  A constructive trust arises by oper­ation of law as an equitable remedy that enables plaintiffs to recover property (and sometimes damages) from defendants who would otherwise be unjustly enriched.  The legal owner of the property is declared to be a trustee for the parties who, in equity, are actually entitled to the beneficial enjoyment that flows from the trust.

 

 

Activity and Research Assignments

 

1.    Ask each student to draft a will for himself or herself disposing of any property he or she may own.  What sorts of problems does drafting a will present in terms of deciding who should receive what property?

 

2.    Ask students to draft their own durable powers of attorney, health-care powers of attorney, or living wills.  What terms would they want to include?  You might pass out standard versions of these forms and ask students what they would change.

 

 

Answers to Essay Questions in

Study Guide to Accompany West’s Business Law, Ninth Edition

By Hollowell & Miller

 

1.    What requirements must be satisfied to create a valid will?  A will must comply with statutory formali­ties designed to ensure that the testator understood his or her actions at the time the will was made.  These formalities are intended to help prevent fraud.  Unless they are followed, the will is declared void, and the de­cedent’s property is distributed according to the laws of intestacy of the state.  Writing.  A written document is generally required, although nuncupative wills are sometimes considered to be valid.  The writing itself can be informal as long as it substantially complies with the statutory require­ments.  A will that is completely in the handwriting of the testator is called a holographic (or olographic) will.  A will can also refer to a written memorandum that itself is not a will but that contains information necessary to carry out the will.  This in­formation—such as a list of charitable beneficiaries—will be “incorporated by refer­ence” into the will only if it was in existence when the will was executed (signed) and if it is sufficiently de­scribed so that it can be identi­fied.  Signature of the Testator.  Almost all jurisdictions require that the testa­tor’s signature be made with the requisite intent to validate the will.  The testator’s signature does not need to be at the end of the will so long as the signature is in the body of the will.  Each jurisdiction dictates by statute and court decision what consti­tutes a signature.  Initials, an “X” or other mark, have all been upheld as valid when it was shown that the testators intended them to be legal signatures.  Witnesses.  A will must be attested by two, and sometimes three, witnesses.  The number of witnesses, their qualifications, and the manner in which the witnessing must be done are generally set out in a state’s statute.  Some states prohibit interested parties—that is, benefi­ciaries—from serving as witnesses.  There are no age requirements for witnesses, but they must be mentally competent.  Witnesses function to verify that the testator actually executed (signed) the will and had the requi­site intent and capacity at the time.  A witness does not have to read the contents of the will.  Most states re­quire that the testator and witnesses all sign in the sight or the presence of one another.  Publication.  The will must also be published.  Publication is an oral declaration by the maker to the witnesses that the document they are about to sign is his or her “last will and testament.”  Publication is becoming an unnecessary formal­ity in most states.  Exceptions.  In general, strict compliance with the preceding formalities (except the one re­lating to witnesses and the one relating to publication) is required before a formal document will be accepted as the decedent’s will.  Holographic wills constitute another exception in some jurisdictions.  A holographic will must be signed by the decedent, however, and its material provisions must be in the testator’s handwrit­ing for the will to be probated.

 

2.    In what ways may a will be revoked?  An executed will is revocable by the maker at any time during the maker’s lifetime.  Wills can also be revoked by operation of law.  Revocation can be partial or com­plete, but the revocation itself must follow certain strict formalities in order to be effective.  By the Maker—Destruction.  Revocation of an executed will by the maker can be effected in either of two ways—by physical act or in writ­ing.  The testator may revoke a will by intentionally burning, tearing, canceling, obliterat­ing, or de­stroying it or by having someone else do so in the presence of the maker and at the maker’s direction.  In some states, partial revocation by physical act of the maker is recognized.  Those portions of a will marked out or torn away will be omitted, but the remaining parts of the will should still be valid.  In no case, however, can a provision be crossed out and an additional or substitute provision written in its stead.  Such alterations require that the will be reexecuted (re-signed) and reattested (rewitnessed).  When a state statute prescribes the exact methods for revoking a will by physical act, those are the only methods that will revoke the will.  By the Maker—a Codicil.  A codicil is a written instrument separate from the will that amends or revokes provi­sions in the will.  It eliminates the necessity of redrafting an entire will merely to add a clause to it or otherwise amend it.  A codicil can also be used to revoke an entire will.  The codicil must be executed with the same for­malities re­quired for a will and refer expressly to the will.  In effect, a codicil updates a will, because the will is “incorpo­rated by reference” into the codicil.  By the Maker—A New Will.  A second will can be executed that may or may not revoke the first will or a prior will, depending upon the language used.  The second will must use specific language such as “This will hereby revokes all prior wills.”  If the second will is otherwise valid and properly executed, it will revoke all prior wills.  If the express declaration of revocation is missing, then both wills will be read together.  If any of the dispositions made in the second will are inconsistent with the prior will, the language of the second will controls.  By Operation of Law.  Revocation by operation of law oc­curs when marriage, divorce or annulment, or the birth of children takes place after a will has been executed. When a tes­tator marries after executing a will that does not include the new spouse, the spouse upon the tes­ta­tor’s death can—in the  majority of states—receive the amount he or she would have taken had the testator died intestate.  In effect, the marriage revokes the will to the extent of providing the spouse with an intestate share.  The rest of the estate is passed under the will.  If, however, the omission of a future spouse is inten­tional in the existing will or the spouse is otherwise provided for in the will (or by transfer of property outside of the will), the omitted spouse will not be given an intestate share.  Divorce does not necessarily revoke the entire will.  A divorce or an annulment occurring after a will has been executed will revoke those dispositions of property made under the will to the former spouse.  If a child is born after a will has been executed and if it appears that the testator would have made a provision for the child, then the child is entitled to receive what­ever portion of the estate he or she is allowed under state intestate laws.  Most state laws allow a child to re­ceive some portion of the estate if no provision is made in a will, unless it appears from the terms of the will that the testator intended to dis­inherit the child.