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Free flashcards to ace your Bar exam - Trusts & Estates
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Trusts & Estates
50 flashcards
A will is a legal document that sets forth a person's wishes regarding the distribution of their property after death.
A will takes effect after death, while a trust can be used to manage assets during life and after death. A will must go through probate, while a properly funded trust can avoid probate.
Probate is the legal process of administering a deceased person's will and distributing their estate to the proper beneficiaries.
The executor is the person named in a will to manage the deceased person's estate, pay debts and taxes, and distribute the remaining assets as directed in the will.
If someone dies without a valid will, their assets are distributed according to the intestacy laws of the state where they resided.
A testamentary trust is a trust established by a will that does not take effect until the death of the person who created the will (the testator).
A revocable trust can be changed or revoked by the grantor during their lifetime, while an irrevocable trust generally cannot be modified or terminated without approval.
A pour-over will is used with a revocable living trust to transfer any leftover assets from the will into the preexisting trust after death.
The rule against perpetuities requires that every future interest in property must vest within a life in being plus 21 years to prevent property from being tied up indefinitely.
The slayer rule prevents someone from inheriting from a person they intentionally killed.
A life estate gives someone the right to use property for the duration of their life, after which the property transfers to the remaindermen.
A holographic will is a will that is completely handwritten and signed by the testator, without witnesses. Its validity varies by state.
The elective share allows a surviving spouse to claim a statutory portion of the deceased spouse's estate, even if they were intentionally disinherited.
The spousal share refers to the portion of a deceased spouse's estate that the surviving spouse is entitled to by law if the deceased spouse dies without a will.
The doctrine of ademption states that if property devised in a will is no longer owned by the testator at death, that specific devise fails or 'adempts'.
The anti-lapse statute prevents devises in a will from lapsing if the beneficiary predeceases the testator, instead passing to the beneficiary's descendants.
A residuary clause in a will governs the distribution of any remaining assets in the estate after all specific devises and bequests have been satisfied.
Per capita gives an equal share to each individual beneficiary, while per stirpes gives shares at each generational level based on the beneficiary's deceased ancestor.
Powers of appointment give the holder authority to decide who will receive certain property, rather than the original grantor making that determination.
The prudent investor rule requires trustees to invest trust assets as a prudent investor would, considering the purposes, terms, distribution requirements, and other circumstances of the trust.
The duty of impartiality requires a trustee to administer a trust impartially, giving due regard to the interests of all the beneficiaries.
A spendthrift provision in a trust restricts the ability of a beneficiary to transfer or assign their interest, protecting it from creditors.
The doctrine of merger states that when the legal and equitable titles to the same property interest merge in one owner, the equitable interest is merged into the legal title.
Creditors generally cannot reach the assets of a trust to collect from a beneficiary, with some exceptions for self-settled trusts and overriding state laws.
A QTIP trust is a type of marital trust that qualifies for the unlimited marital deduction but gives the surviving spouse only an income interest for life.
A charitable lead trust pays an income stream to a charity for a period of time, after which the remainder passes to non-charitable beneficiaries.
A GRAT is an irrevocable trust where the grantor retains an annuity payment for a term of years, after which the remainder passes to beneficiaries at a discounted value for gift taxes.
An intentionally defective grantor trust allows the grantor to be treated as the owner for income tax purposes while excluding the trust assets from the grantor's estate.
Ademption by extinction occurs when a specific gift fails because the property bequeathed no longer exists when the will becomes effective.
Abatement refers to the reduction or elimination of a gift under a will when there are insufficient assets to satisfy all gifts and obligations.
The doctrine of worthier title prevented a person from inheriting their own property interest back from their transferee's estate.
A contingent remainder is a future interest that depends on the occurrence of some event before it can become a present possessory estate.
The doctrine of shifting executory interests allows future interests to be rearranged if an attempted transfer initially violates the rule against perpetuities.
Joint tenants have rights of survivorship, while tenants in common can freely transfer their interests during life or at death.
A Totten trust is an informal revocable trust created by designating a beneficiary for a bank account payable on death.
The Slayer Rule prevents someone who feloniously kills another person from receiving property or benefits from the decedent's estate.
The Rule in Shelley's Case states that a life estate to A and remainder to A's heirs creates a fee simple interest in A, rather than splitting the interests.
The doctrine of election requires a beneficiary to choose between accepting a provision in the will or keeping property they already own that was disposed of by the will.
A Crummey power gives trust beneficiaries a temporary right to withdraw contributions, qualifying gifts to the trust for the annual gift tax exclusion.
The duty of loyalty requires a trustee to administer the trust solely in the interests of the beneficiaries and to avoid self-dealing or conflicts of interest.
If a general testamentary power of appointment lapses, the appointive property passes as part of the powerholder's estate rather than to their appointees.
The doctrine of independent significance gives effect to provisions that can operate independently from invalid provisions in a will.
The penalty doctrine causes an interest that violates the rule against perpetuities to be voided entirely, rather than simply limiting its duration.
A reformation corrects a mistake to conform the trust terms to the settlor's intent, while a modification changes a trust's administrative or dispositive provisions.
A holographic will must be fully handwritten and signed by the testator, with requirements for witnesses varying by state.
The mortmain doctrine restricted transfers of land to charitable organizations to prevent perpetual ownership that removed property from society's productive use.
The doctrine of cy pres permits courts to modify a charitable trust's terms to carry out the donor's intent as closely as possible when literal compliance becomes impossible.
The ascertainable standard requirement for trust distributions limits a trustee's discretion based on an objective standard related to a beneficiary's health, education, support or maintenance.
The doctrine of incorporation by reference allows a will to give effect to language in an external document if certain formalities are observed.
Disclaiming an inheritance involves a beneficiary's formal, irrevocable refusal to accept property from a will or trust within a specified time period.