Trusts and Estates Cases Outline
Many principles involving wills, trusts, and other estate planning instruments spring from state laws, which are often based on the Uniform Probate Code. However, a student of this topic also must understand how courts have interpreted these statutes, as well as common law doctrines that may apply. Below is an outline of key cases in trusts and estates with links to the full text of virtually every case, provided free by Justia.
Inter Vivos Gifts
An inter vivos gift is a gift made while the donor and the recipient are still alive. This is the opposite of a testamentary transfer through an estate planning document.
Gruen v. Gruen 一 To make a valid inter vivos gift, there must be intent by the donor to make a present transfer, actual or constructive delivery of the gift to the donee, and acceptance by the donee. The proponent of the gift must prove each element by clear and convincing evidence.
Franklin v. Anna National Bank 一 A decedent made another person a signatory on a savings account for their own convenience and not with intent to effect a present gift.
Intestate Succession Rules
Intestate succession is the process of distributing assets in the estate of a decedent who did not engage in estate planning. Assets are allocated according to a hierarchy provided by state law, with the spouse and lineal descendants taking priority. Non-blood relatives generally cannot inherit assets, unless they were adopted.
Estate of Goick 一 An oral agreement between the parties cannot be considered the equivalent of a divorce decree or order for intestate succession purposes when no final order was issued.
Estate of Locke 一 When a decedent has no surviving issue, parent, or issue of a parent, but is survived by the issue of grandparents on both the paternal and maternal sides, the estate is divided into halves, with one half going to the survivors in each line.
Estate of Borghi 一 Once the separate character of property is established, a presumption arises that it remained separate property in the absence of sufficient evidence to show an intent to transmute the property from separate to community property.
Jones v. Stubbs 一 Children of deceased brothers and sisters of the whole blood occupy the same position as their parents, by right of representation.
Estates of Donnelly 一 An adopted child cannot inherit from their natural grandparents under intestate succession rules.
Estate of Villwock 一 If the title to property or the devolution of it depends on priority of death, and there is no sufficient evidence that persons have died otherwise than simultaneously, the property of each person shall be disposed as if they had survived.
Estate of Baird 一 State law does not authorize an anticipatory disclaimer of an expectancy interest created by intestacy.
Drye v. U.S. 一 A disclaimer did not defeat federal tax liens.
Molloy v. Bane 一 While one may renounce a testamentary or intestate disposition, such a renunciation is not without its consequences for the purpose of calculating Medicaid eligibility.
Formation of Wills
Wills usually must be in writing and signed by the testator or signed in their name by someone else in their presence and at their direction. Generally, at least two witnesses also must sign the will after witnessing the testator signing the will or acknowledging their signature. Holographic (handwritten and non-witnessed) wills are valid only in some states.
Morris v. West’s Estate 一 A will and codicil had no testamentary effect when the two attesting witnesses were not in the presence of the testator when the witnesses signed the documents.
Estate of Hall 一 If two individuals do not properly witness a will, the document may still be treated as if it had been executed if the proponent establishes by clear and convincing evidence that the decedent intended the document to be their will.
Estate of Norton 一 A will may incorporate another document by reference if the document exists when the will is executed, and the reference to it is in terms that are so clear and distinct that full assurance is given that the identity of the extrinsic document has been correctly ascertained.
Clark v. Greenhalge 一 A codicil to a will serves to ratify the language in the will that has not been altered or affected by the terms of the codicil.
Will of Tipler 一 Under the doctrine of independent significance, a court may refer to extrinsic evidence to identify the persons who are to take under the will.
Will Contests
Grounds for challenging a will include lack of capacity and undue influence. Capacity is found when the testator understands the nature and extent of their property, understands the natural objects of their bounty, and understands that they are engaged in making a will. Undue influence involves manipulating or pressuring the testator into making a certain disposition of assets. Fraud also may serve as a basis for challenging a will.
Barnes v. Marshall 一 A testator’s stated views on government, religion, morals, and finances went beyond the classification of peculiarities and eccentricities and were sufficient evidence from which a jury could reasonably find that they were of unsound mind.
Wilson v. Lane 一 Eccentric habits and absurd beliefs do not establish testamentary incapacity. All that is required to sustain a will is proof that the testator was capable of forming a certain rational desire with respect to the disposition of their assets.
Daley v. Boroughs 一 Despite any mental impairment, a testator may sign a will during a period when they are experiencing a lucid interval.
Dougherty v. Rubenstein 一 An insane delusion will invalidate a will for lack of capacity if the delusion produced the disposition made in the will. This is not a general defect of the mind but instead an insanity directed to something specific.
Gonsalves v. Superior Court 一 An attorney who fails to investigate the testamentary capacity of their client is not liable to a former beneficiary disinherited by the will drawn by the attorney.
In re Will of Moses 一 The mere existence of confidential relations between a testator and a beneficiary does not raise a presumption of undue influence. However, undue influence is presumed when the beneficiary has been actively concerned with the preparation or execution of the will, or when the relationship is coupled with some suspicious circumstances, such as mental infirmity of the testator.
Haynes v. First National State Bank of New Jersey 一 The presumption of undue influence created by a professional conflict of interest on the part of an attorney, coupled with confidential relationships between a testator and the beneficiary as well as the attorney, must be rebutted by clear and convincing evidence.
Latham v. Father Divine 一 When a devisee or legatee under a will prevents the testator by fraud, duress, or undue influence from revoking the will and executing a new will in favor of someone else, and the testator dies with the original will in force, the devisee or legatee holds the property thus acquired on a constructive trust for the intended devisee or legatee.
Estate of Ellis 一 A tort claim for intentional interference with inheritance does not contest the validity of the will but is a personal action directed at an individual tortfeasor. However, courts may restrict the tort in certain circumstances when a plaintiff forgoes an opportunity to file a tort claim within the period for a will contest.
Will of Kaufmann 一 Undue influence may be found when there is a marked departure from a prior, natural plan of testamentary disposition that excessively and unnaturally favors a non-relative under circumstances establishing motive, opportunity, overreaching, and persistent involvement in transfers and dispositions of property in contemplation of death.
Interpretation of Wills
Common issues involving the interpretation of a will include mistake and ambiguity. The standard for a mistake is challenging to meet. An ambiguity in a will allows a court to consider extrinsic evidence to resolve the ambiguity.
Gifford v. Dyer 一 A mistake must appear on the face of the will, and it must also appear what would have been the will of the testator but for the mistake.
Knupp v. District of Columbia 一 There must be an ambiguity for a court to consider extrinsic evidence. In all cases in which such evidence is received, it can be utilized only for the purpose of interpreting something actually written in the will and never to add provisions to the will.
Revocation and Revival of Wills
A subsequent written instrument can revoke a will, either explicitly or by creating an inconsistency. A will also can be revoked by destruction or by certain major life changes, such as divorce. A testator can revive a will by re-executing the instrument or by republishing it through incorporation by reference with a codicil.
Gushwa v. Hunt 一 The Probate Code requires an exacting attention to form as well as intent to validate a revocation. Also, revocatory acts performed on a photocopy of the original will do not meet the statutory requirements for revocation.
Ward-Allen v. Gaskins 一 If a will or codicil cannot be found at the death of the testator, a presumption arises that the will was destroyed by the testator with the intention of revoking it.
Oliva-Foster v. Oliva 一 When a testator destroys a will with the intention of making a new will immediately as a substitute, but the new will is not made or fails, it is presumed that the testator preferred the old will to intestacy, and the old will should be admitted to probate in the absence of evidence overcoming the presumption.
Garrett v. Read 一 Although a contractual will revoked by the execution of a second will cannot be probated, it may be enforced as a contract against the estate of the testator breaching it.
Abatement, Ademption, Lapse, and Slayer Statutes
Abatement occurs when the estate does not have enough assets to complete the devises provided by the will. Ademption occurs when a specific gift in the will is no longer in the estate. Lapse addresses what happens when a recipient of a devise dies before the testator. Slayer statutes provide that someone who intentionally kills the testator cannot inherit from them.
Estate of Potter 一 General devises abate before specific devises. A general devise may be satisfied out of the general assets of the testator’s estate, while a specific devise is a gift of property that is particularly designated and is to be satisfied only by the receipt of the particular property described.
McGee v. McGee 一 A testamentary gift of specific real or personal property may be adeemed and fail completely to pass as prescribed in the will when the article no longer exists as part of the testator’s estate because of its alienation subsequent to the execution of the will.
Estate of Rehwinkel 一 The anti-lapse statute does not apply when the testator uses words of survivorship indicating an intention that the devisee shall take the gift only if they survive the testator.
Morse v. Sharkey 一 When the class of “brothers and sisters” was unambiguously qualified and limited by the phrase “that survive me,” this qualification clearly indicated the testator’s intent to exclude her predeceased siblings and their heirs from the class of devisees.
Ford v. Ford 一 For the slayer’s rule to be invoked, the killing must have been both felonious and intentional.
Trust Formation
A trust may be an inter vivos trust created during the life of the settlor or a testamentary trust created in their will. In general, a trust contains property managed by a trustee for beneficiaries, to whom the trustee owes fiduciary duties of loyalty and care. A sole beneficiary of a trust cannot also be the sole trustee. If a settlor fails to name a trustee, a court may appoint a trustee.
Spicer v. Wright 一 Precatory words are prima facie construed to create a trust when they are directed to an executor. However, no trust is created by precatory language directed to a legatee unless there is testamentary intent to impose a legal obligation on them to make a particular disposition of property.
Levin v. Fisch 一 In determining whether particular words are to be construed as precatory or mandatory, a court will look to the expressed intent of the testator, as found from the context of the will and surrounding circumstances. Words that are precatory in their ordinary meaning will be construed as mandatory only when it is evident that this was the testator’s intent.
Goodman v. Goodman 一 A repudiation occurs when the trustee by words or other conduct denies that there is a trust and claims the trust property as their own. The repudiation must be plain, strong, and unequivocal.
Wells v. Sanford 一 The term “necessary for support” has a legal construction. A trust written in those terms is to be used to support the beneficiary, regardless of their own assets.
Marsman v. Nasca 一 A trustee who held a discretionary power to pay principal for the “comfortable support and maintenance” of a beneficiary had a duty to inquire into the financial resources of the beneficiary to recognize their needs.
Duties of the Trustee
A trustee has a duty of loyalty to manage a trust in the interests of beneficiaries. A trustee also has a duty of care, including a duty to inform or report to beneficiaries. Trustees have more specific duties regarding investments and their ability to delegate their functions to others.
Matter of Kinzler 一 An executor must discharge their fiduciary duties so that all legatees are treated in a similar manner and without prejudice or discrimination.
In re Estate of Rothko 一 If a trustee in breach of trust transfers trust property to a person who takes with notice of the breach of trust, and the transferee has disposed of the property, it is proper to charge them with the value at the time of the decree.
Allard v. Pacific National Bank 一 A trustee must inform beneficiaries of all material facts in connection with a non-routine transaction that significantly affects the trust estate and the interests of the beneficiaries prior to the transaction taking place.
Shriners Hospitals v. Gardiner 一 A trustee has a duty to observe the standard in dealing with the trust assets that would be observed by a prudent person dealing with the property of someone else. A trustee breaches this standard when they delegate responsibilities that they reasonably can be expected personally to perform.
In re Estate of Janes 一 A fiduciary holding funds for investment may invest them in such securities as would be acquired by prudent persons of discretion and intelligence in such matters who are seeking a reasonable income and the preservation of their capital.
McGinley v. Bank of America 一 Since a trustee followed written directions received from the grantor of a revocable trust regarding the property of the trust, it complied with the prudent investor rule and was authorized to follow those written directions.
Trusts and Creditors
A creditor steps into the shoes of a beneficiary by attaching a trust. They cannot receive more or less than what the beneficiary is entitled to receive. A trustee may breach their duty if they pay funds from the trust to a creditor when this is not required.
Wilcox v. Gentry 一 There is no valid reason for treating payments to a beneficiary differently from payments made on behalf of the beneficiary as far as creditors are concerned.
Scheffel v. Krueger 一 A spendthrift provision is enforceable unless the beneficiary is also the settlor, or the assets were fraudulently transferred to the trust.
FTC v. Affordable Media, LLC 一 A protector of an offshore trust can be compelled to exercise control over the trust to repatriate assets if their powers are not drafted solely as the negative powers to veto trustee decisions, or if their powers are not subject to the anti-duress provisions of the trust.
Revocable Living Trusts and Pour-Over Wills
A revocable living trust can allow assets to avoid probate, streamlining the process and protecting the privacy of beneficiaries. Some revocable trusts are funded by pour-over wills, which provide that a person’s remaining assets will be transferred into a pre-existing trust upon their death.
Heaps v. Heaps 一 Saying that title to trust property could be held in any way meant that selling an asset and taking title in a name other than that of the trust would not by itself take the property out of the trust.
Clymer v. Mayo 一 When a will and trust were integrally related components of a single testamentary scheme, an ex-spouse’s interest in the trust was revoked by operation of state law when their interest under the decedent’s will was revoked.
Committee on Professional Ethics and Conduct of Iowa State Bar Association v. Baker 一 The unauthorized practice of law includes giving legal advice directly or indirectly to individuals or groups concerning the application, preparation, advisability, or quality of any legal instrument or document or forms thereof in connection with the disposition of property inter vivos or upon death, including inter vivos trusts and wills.
Spendthrift Trusts and Medicaid
A spendthrift trust allows a settlor to protect a beneficiary from exhausting assets due to their poor judgment, but it also can shield a beneficiary from third-party claims. Sometimes disputes arise in relation to these trusts and any Medicaid benefits provided to the beneficiary.
In re Estate of Gist 一 Since a trust was a discretionary trust with standards, the state could recover a lien for necessities supplied to the beneficiary from the trust despite the spendthrift provision. The lack of symmetry between Medicaid eligibility requirements and the ability of Medicaid to recover from an estate does not preclude recovery.
Cohen v. Commissioner of Division of Medical Assistance 一 When the terms of a trust gave the trustee discretion to pay both income and principal to the beneficiary and limited that discretion only to ensure the beneficiary’s eligibility for public assistance, the trust was properly considered a Medicaid qualifying trust. The amount deemed available to the beneficiary for the purposes of Medicaid eligibility was the full amount of the trust.
Charitable Trusts
Federal estate and gift taxes provide a full deduction for charitable gifts, and a trust for a spouse’s life will be tax-free when it provides for a charitable remainder. The dominant intent of the settlor must be charitable rather than benevolent, and the trust cannot have ascertainable beneficiaries.
Shenandoah Valley National Bank of Winchester v. Taylor 一 A trust from which the income is to be paid at stated intervals to each member of a designated segment of the public, without regard to whether the recipients are poor or in need, is a mere benevolence (or private trust) and may not be upheld as a charitable trust.
Estate of Crawshaw 一 The cy pres doctrine permits a court to implement a testator’s intent and save a gift to charity by substituting beneficiaries when the named charitable beneficiary is unable to take the gift. For the doctrine to apply, the gift must be to a charitable organization for a charitable purpose; it must be impossible, impractical, or illegal to carry out the donor’s stated charitable purpose; and it must appear that the donor had a general charitable intent.
Powers of Appointment Under Trusts
A power of appointment may be general, which allows an individual to appoint anyone, or it may be special, which requires an individual to appoint someone from a certain group of people. The power of appointment may be present, allowing the individual to exercise it immediately, or it may be testamentary, requiring the individual to exercise it in their will.
Estate of Hamilton 一 If the donor has expressly directed that no instrument shall be effective to exercise the power unless it contains a specific reference to the power, an instrument not containing such a reference does not validly exercise the power.
Estate of Block 一 A conventional residuary clause disposing of the testator’s remaining assets exercises a power of appointment unless the intention that the will is not to operate as an execution of the power appears expressly or by necessary implication.
Will of Carroll 一 A person having a limited power must exercise it bona fide for the end designed. Otherwise, the execution is a fraud on the power and void.
Estate Taxes
The taxable estate includes assets owned at death, in addition to insurance, retirement accounts, general powers of appointment, retained interests, joint tenancies, and taxable lifetime gifts. Powers of appointment that are limited by an ascertainable standard are not included in the taxable estate.
Estate of Kohlsaat 一 When trust beneficiaries, including minor and contingent beneficiaries, are given unrestricted rights to demand immediate distributions of trust property, the beneficiaries generally are treated as possessing present interests in property.
Best v. U.S. 一 A trust document permitting invasion of the trust’s principal or corpus when reasonably necessary for the beneficiary’s comfort, support, and maintenance does not create a general power of appointment but creates an invasionary power limited by an ascertainable standard relating to the health, education, support, or maintenance of the beneficiary and thus permits excludability from their gross estate.
Modification and Revocation of Trusts
In general, a trust is presumed to be irrevocable unless the document states that it is revocable. A trust may or may not be revoked by state law upon a divorce. A trust often can be terminated upon the consent of the beneficiaries if additional conditions are met, such as the completion of the purposes of the trust.
Connecticut General Life Insurance Co. v. First National Bank of Minneapolis 一 When a settlor reserves the power to revoke a trust by a transaction inter vivos, such as by providing notice to the trustee, they cannot revoke the trust by their will.
Adams v. Link 一 Conditions precedent that should concur to warrant termination of a testamentary trust by judicial decree are that all the parties in interest unite in seeking the termination, every reasonable ultimate purpose of the trust’s creation and existence has been accomplished, and no fair and lawful restriction imposed by the testator will be nullified or disturbed by such a result.
American National Bank of Cheyenne v. Miller 一 If all the beneficiaries of a trust consent, and none is under an incapacity, they can compel the termination of the trust. However, if the continuance of the trust is necessary to carry out a material purpose of the trust, the beneficiaries cannot compel its termination.
Walker v. Walker 一 A court may require a trust to be reformed on clear and decisive proof that the instrument fails to embody the settlor’s intent because of scrivener’s error. To ascertain the settlor’s intent, a court should look to the trust instrument as a whole and the circumstances known to the settlor on execution. A court may accept extrinsic evidence, such as an attorney’s affidavit, that demonstrates that there has been a mistake.
Future Interests in Estates
Traditionally, early vesting is favored for future interests. When a grantor makes a gift to a class, the membership in the class can increase only until one member of the class is entitled to possession. The recipients of a gift to “heirs” are determined at the death of the grantor under the common law, but at the moment of distribution under the Uniform Probate Code.
Uchtorff v. Hanson 一 Only when a condition serves to make it dubious or uncertain that the remainder interest will ever pass does the condition make the remainder contingent.
Estate of Evans 一 When a class gift is postponed until the occurrence of some event, such as the attainment of age 21, the class does not normally close until the first member of the class attains the designated age.
Usry v. Farr 一 In view of the strong preference for early vesting, the language required to render a remainder contingent on surviving the life tenant must be clear and unambiguous.
Matter of Marine Midland Bank 一 When a will provided that if a brother of the decedent predeceased the decedent’s wife, his share of the trust would be paid to his surviving child or children, this did not extend to a brother’s grandchildren when their parent who was the child of the brother predeceased the decedent’s wife, and the brother had another surviving child.
Payable-on-Death Accounts and Retirement Accounts
Funds in payable-on-death accounts and retirement accounts generally go directly to their named beneficiaries without passing through probate. A Totten trust is a type of revocable trust that consists of a payable-on-death bank account with a named beneficiary.
Araiza v. Younkin 一 Sums remaining on deposit in a Totten trust after the death of the sole trustee belong to the person named as beneficiary unless there is clear and convincing evidence of a different intent.
Nunnenman v. Estate of Grubbs 一 A change of beneficiary can be accomplished in a will so long as the language of the will is sufficient to identify the insurance policy involved and an intent to change the beneficiary. (Attempts to change IRA beneficiaries by will are analogous.)
Kennedy v. Plan Administrator for DuPont Savings and Investment Plan 一 When a divorced spouse who was the designated beneficiary under her ex-husband’s ERISA pension plan purported to waive her entitlement by a federal common-law waiver embodied in a divorce decree that was not a QDRO, the plan administrator properly disregarded the waiver due to its conflict with the designation made by the former husband in accordance with plan documents.
Elective Shares
Elective share statutes prevent a surviving spouse from being completely disinherited by a deceased spouse. The elective share gives them the option to take a default share of the estate, rather than any property allotted to them under the will. A child also may have elective share rights.
Sullivan v. Burkin 一 For the purposes of the elective share law, the estate of a decedent shall include the value of assets held in an inter vivos trust created by the deceased spouse as to which the deceased spouse alone retained the power during their life to direct the disposition of those trust assets for their benefit.
Geddings v. Geddings 一 The right of election of a surviving spouse may be waived by a written contract signed by the party waiving after fair disclosure.
Prestie v. Prestie 一 State law does not permit evidence of an amendment to an inter vivos trust to rebut the presumption of a will’s revocation as to an unintentionally omitted spouse.
Estate of Glomset 一 When a testator omits to provide in their will for any of their children, such a child must have the same share in the estate of the testator as if they had died intestate, unless it appears that the omission was intentional.
Guardianships and Powers of Attorney
A guardianship and a power of attorney each authorize a person to handle important matters, such as finances and health care, for someone who is incapacitated. A power of attorney allows the person to choose their agent, while a court chooses a guardian.
In re Maher 一 In exercising its discretion to appoint a guardian for an individual’s property, a court must determine that the appointment is necessary to manage the property or financial affairs of that person, and that they agree to the appointment or are incapacitated. A determination of incapacity must be based on clear and convincing evidence that the person is likely to suffer harm because they are unable to provide for property management and cannot adequately understand and appreciate the nature and consequences of this inability.
Estate of Huston 一 Since a power of attorney must be in writing, any act performed by the agent acting under the power of attorney must be ratified in writing to be valid.
This outline has been compiled by the Justia team for solely educational purposes and should not be treated as an independent source of legal authority or a summary of the current state of the law. Students should use this outline as a supplement rather than a substitute for course-specific outlines.
