Power of appointment
What is POA? What is Re-POA?
Authority granted by the donor/settlor to a donee/beneficiary to direct where certain trust assets will go.
the donee can exercise it arbitrarily or choose not to exercise it at all.
Re-POA: Donee may appoint assets into another trust that contains a new POA, subject to RAP limits.
Decedent: dies intestate, survived by spouse. No children, no parents, no siblings.
Property:
• $300,000 community property
• $100,000 separate property
Question: How much does spouse inherit?
Community property → 100% to surviving spouse.
• Separate property → 100% to surviving spouse (no issue/parents/siblings).
Spouse inherits $400,000 total.
Aisha executes a valid will in 2016 stating in pertinent part, “I leave my art collection to the people
named in the file labeled ‘ArtBequests’ in my computer.” She created the file in 2015 & last uploaded
it in 2017. Does the list control disposition of her art collection?
Yes, meets all three elements
Maria emails her financial advisor: “I want my investment account held for the benefit of my closest friends so they always have something if they need it. Please handle it.” She takes no additional action. Her will says nothing about a trust.
After Maria’s death, her advisor claims Maria created a valid inter vivos trust. Her heirs argue the trust fails for lack of ascertainable beneficiaries.
Was a valid trust created?
No.
A valid trust requires intent, specific property, and ascertainable beneficiaries. “Closest friends” is too indefinite (Clark v. Campbell). The email also does not clearly manifest intent to create a fiduciary relationship, there is no trustee identified and no transfer/declaration.
A trust states: “Trustee shall distribute all net income annually to Sam.” Sam owes $40k to a creditor.
A second trust for Sam states: “Trustee may distribute income or principal in trustee’s absolute discretion.”
What can the creditor reach?
• Mandatory trust → creditor can attach and compel the income distribution.
• Discretionary trust → creditor cannot compel, but may obtain an order attaching any distributions actually made.
• Spendthrift clause does not matter for mandatory distributions.
What's required for POA?
The donee must show intent to exercise the POA, use the instrument, satisfy any specific reference requirement, and exercise the POA only within the class of permissible appointees.
Decedent dies intestate, survived by spouse, and three children.
Property:
• $200,000 community property
• $90,000 separate property
How much does each get?
• Community property → 100% to Spouse.
• Separate property → 1/3 to spouse; 2/3 to children
• Spouse: $30,000
Each child: $20,000
John's will leaves his estate to 3 of his 4 children in equal shares. He omits his 4th child, Phillip, because he believes Phillip has a contagious disease and wants to infect everyone in the family. Phillip is in perfect health. What can Phillip claim?
Insane delusion
Trustee Laura sells trust real estate to her own LLC at fair market value. The sale benefits the trust; the beneficiaries receive more liquidity needed for tax payments. Beneficiaries sue.
Did Laura breach?
Yes.
This is self-dealing, and the no-further-inquiry rule applies: even if transaction is fair, even if it benefits the trust, it is automatically a breach unless (1) authorized by trust instrument, (2) approved by court, or (3) beneficiaries gave informed consent.
Result → Laura liable; beneficiaries can void the sale or surcharge her.
T and her son die in a car crash. It’s unclear who died first. T is survived by a daughter. Does the son’s estate inherit?
Under the 120-hour rule, if survival cannot be proven by clear and convincing evidence, the son is deemed to have predeceased. His estate does not inherit. The daughter takes 100%.
What is general POA? What is special POA?
Donee can appoint property to self, estate, creditors, or creditors of estate.
Donee may appoint among a limited class.
Brad and Angelina are celebrities who have a daughter together. The three of them live together although Brad and Angelina refuse to marry. Brad loves the child and supports her and they often spend time watching the episode of Friends where Brad appears as Monica’s old boyfriend. If Brad dies intestate without other children, but is survived by Angelina and his parents, who inherits his estate?
Angelina is not likely to inherit because her relationship with Brad is “meretricious,” unless she can make a case based loosely on quantum meruit (Marvin v. Marvin). Daughter has stronger rights of inheritance than Angelina, although she will have to meet a higher standard to inherit from her father than from her mother. Here, she will likely inherit because Brad has taken steps to recognize his paternity during the child’s lifetime, including living with her and supporting her. See CPC § 6452 (allowing inheritance if the parent has acknowledged the child and has contributed to her support). If Brad appears on the birth certificate, that would be additional evidence. DNA evidence would also help her make her case.
1. T’s will states: “I leave my Rolex to my nephew Alex.” T has two nephews named Alex. Both claim the watch. The drafting attorney testifies that T always referred to “Little Alex” as “my eldest nephew,” which is incorrect. No other clues in the will. Can extrinsic evidence come in?
2. T’s will says: “I leave $50,00 to my cousin Eric.”
There is an obvious typo, and T actually had two cousins: Eric and Erica. Drafting notes say T wanted to leave “fifty-thousand to Erica.” Who does it go to?
1. EE admissible for latent ambiguity (equivocation). Court admits EE; resolves in favor of the Alex most consistent with surrounding facts, but NOT scrivener testimony about subjective intent unless reformation standards met.
2. Traditionally no reformation; modern UPC/Duke: reformation allowed with clear and convincing evidence of mistake + true intent. Court reforms to $50,000 → Erica.
T leaves: “$30,000 to my friend Rachel, to be used for the care of my dog Zeus, and whatever is left she may keep.”
Rachel spends only $1,000 on the dog and keeps the rest.
Is this enforceable?
Modern statutes allow valid pet trusts, enforceable by a designated person or court-appointed person.
Trustee (Rachel) owes fiduciary duty; can be compelled to spend funds on Zeus; excess reverts or follows trust terms.
T dies leaving three children: A (alive), B (predeceased with two kids), C (predeceased with one kid). How is the estate distributed in CA?
CA follows modern per stirpes (per capita with representation).
Find the first generation with a living member → here, the children’s generation (A is alive).
Count members in that generation:
A (alive)
B (dead but with issue)
C (dead but with issue)
→ 3 shares.
A gets 1/3.
B’s 1/3 is split equally between B’s two children → each gets 1/6.
C’s 1/3 goes entirely to C’s one child → 1/3.
A = 1/3 B1 = 1/6 B2 = 1/6 C1 = 1/3
What is a nongeneral, nonexclusive power?
Must include at least one member of the permissible class.
During his lifetime, B gave a $10,000 advancement to his son Q, a $1,000 advancement to his daughter R, and nothing to his son S. Upon B's death intestate, survived only by Q, R, and S, B owned property worth $7,000. Calculate the value of the hotchpot (estate + advancements), the share of each child, and the actual inheritance of each child.
An initial calculation of the hotchpot - $18K - reveals that Q received more than his intestate one-third share of $6K ($18K divided equally by 3 children), so Q and his $10K advancement are excluded from the hotchpot and we recalculate.
The new hotchpot consists of R's advancement of $1K plus the $7K property owned by decedent at death, for a total of $8K, which will be divided by the two eligible children. Of this, R receives $3K ($4K minus the $1K advancement already received = $3K) and S receives $4K.
R's share and S's share equal the amount that is actually in the estate. Q, excluded from the hotchpot because he had already received in excess of his intestate share, receives nothing. Q is not required to return any of his advancement to the estate.
T (elderly, dependent on caregiver G) leaves $200k to her niece N in attested will. Two months before death, T writes a holographic codicil: “Give everything to G. N doesn’t deserve it.” Evidence shows G lied to T saying N was stealing.
Is the holographic codicil valid?
Holographic codicil valid if material provisions in handwriting. BUT:
• Undue influence: confidential relationship + active procurement + unnatural result.
• Fraud in inducement: G’s false statements caused change.
Result: codicil invalid. Original will controls.
A trust directs funds “to maintain a free hospital in Town X.” Town X no longer has enough population to support a hospital; the state now provides all medical services through a regional center 30 miles away.
Can the trust be modified?
Yes.
Running a hospital in Town X is impracticable. If settlor had general charitable intent (health/medical care), court can apply cy pres and redirect money to the regional medical center (Neher’s Will).
T’s will: “I leave $50,000 to my siblings.”
At execution, T has three siblings: A (alive), B (alive), C (predeceased with two children). C dies before T. What happens?
Class gift → anti-lapse applies to class gift if:
1. a class member is kindred to the testator
2. was alive when the will was made
3. predeceases the testator leaving issue
4. the will does not provide otherwise.
HERE: C is a sibling and therefore kindred, C was alive when will was executed and predeceases T leaving issue and will does not provide otherwise.
- Determine distribution of the class gift: Class members = A, B, C.
Total gift = $50,000 → 3 shares of ~$16,666.67 each.
A takes $16,666.67
B takes $16,666.67
C’s lapsed class share passes to C’s issue per stirpes under anti-lapse → C’s two children split C’s share equally.
What happens if a power is not exercised?
Property passes to default takers in default of appointment.
Harold, age 30, is single. He has a long-time friend, Charles. Harold adopts Charles, who is 27 and married. He does so with the consent of Charles’ spouse, Sue. Harold does this to ensure that Charles will inherit from Harold, with or without a will, and despite possible challenges by members of Harold’s litigious family. Harold dies, leaving his estate to Charles. However, shortly thereafter, Charles learns that Harold’s father, Gil, has just died, leaving an enormous trust to be divided between Gil’s children and their issue by right of representation. Neither Harold or Charles knew about the trust. Is Charles entitled to take under the terms of the trust?
Probably yes.
Adult adoption is legal. Harold did not adopt Charles in order to qualify him as a beneficiary under Gil’s trust. Gil’s testamentary instrument was most likely in existence at the time but it was not known to Harold or Charles. Harold adopted Charles in order to settle his own estate on him without discord, not to position him to receive under the trust. Charles will argue that he is an innocent beneficiary
In California, a testator has three children: Abe, Bob, and Carol. The testator makes a will leaving his entire estate to Abe and Bob. The attorney and Abe are the witnesses to the testator signing the will.
1. Is the will valid?
2. What amount of the estate will Bob receive?
3. What amount of the estate will Abe receive?
4. What, if anything, would change if the attorney’s legal assistant were a third witness?
1. YES. The formalities are: in writing, signed, and attested by 2 witnesses. This meets all three.
Being an interested witness doesn’t go to the issue of validity—it goes to the issue of whether the
gift is purged (see answer 3).
2. 1/2 (...but see answer 3)
3. Could be 1/2 >, as an interested witness, there is a rebuttable presumption of undue influence
or duress. BUT it is rebuttable – could be overcome
Could be 1/3 > If not overcome, then Abe receives his intestate share
4. a. The will would still be valid. Abe would be a “supernumerary” witness—there is a sufficient
number of disinterested witnesses for a validly attested will without Abe.
b. Bob would still receive 1/2
c. Abe would receive 1/2 – without rebutting any presumption
A discretionary spendthrift trust makes distributions for “health, support, and education.” Trustee intentionally pays $20k for Beneficiary’s luxury vacation. The beneficiary owes child support arrears.
Is there a breach of duty? What are the creditors rights?
Trustee breached support-based discretion → luxury vacation is outside HEMS standard.
Child support pierces spendthrift → creditor can attach (but not compel discretionary distributions unless mandatory).
On February 1, 2005, Susie, a 75-year-old widow, executed a properly attested will leaving her
entire estate to her only child, Mary. Thereafter Mary and Susie became estranged after a heated political debate. On March 2, 2010, Susie executed a new will leaving her entire estate to her granddaughter, Carla. Susie kept both original wills in her possession. Susie and Mary remained estranged until January 2018 when Mary received a call from Carla informing Mary that Susie had fallen at her home and was in the hospital. Mary rushed to the hospital to be with her mother. In the two months that followed Susie’s fall, Mary came and took care of Susie at Susie’s home every day. However, having suffered a severe fracture in her hip, Susie never recovered and she died in her home on March 15, 2018.
Just before she died, Susie asked Mary to call Susie’s attorney and schedule a time for the attorney to come to her house and meet with Susie. Susie’s attorney came to the house and drafted a new will leaving Susie’s entire estate to Mary. The attorney mailed the will to Susie, who reviewed it and concluded that it reflected her wishes. However, the attorney’s schedule was so busy that she could not schedule a time for the execution of the will with Susie until April of 2018. On March 14, 2018, Susie took the March 2, 2010 will and ripped into in half. Susie died on March 15, 2018.
Discuss: (1) The enforceability of the 2005 will; (2) The enforceability of the 2010 will; (3) The enforceability of the 2018 will; (4) What options are available to the court if the 2018 will is invalid? Hint: DRR
1. 2005 will revoked by 2010 will bc inconsistency with subsequent instrument
2. Revoked 2010 will by physical act
3. Draft of 2018 will invalid bc not signed, but can be used as evidence of intent
4. Dies intestate -> mary inherits, could argue DRR that she had mistaken belief that 2018 will would be valid or that the 2005 will would have been revived when she revoked 2010.