Trusts and Estates on the Bar Exam: Wills, Trusts, and Intestacy

Trusts and Estates (also called Wills and Trusts or Decedents' Estates) is a regular MEE subject. It combines two related areas: how property passes at death (wills and intestacy) and how property can be managed for the benefit of others during life and after death (trusts).

Wills

Requirements for a Valid Will

A valid will requires:

1. Testamentary capacity: The testator must be of legal age and of sound mind. Sound mind means understanding the nature and extent of their property, knowing who their natural beneficiaries are, and understanding the nature of the testamentary act.
2. Testamentary intent: The testator must intend the document to be their will.
3. Compliance with formalities: Typically, the will must be in writing, signed by the testator, and attested by at least two witnesses who observe the signing or the testator's acknowledgment.

Holographic Wills

A will entirely in the testator's handwriting and signed by the testator, but not attested by witnesses. Recognized in about half the states. Under the UPC, only the material portions need to be in the testator's handwriting.

Codicils

A supplement or amendment to an existing will. Must be executed with the same formalities as a will. A codicil republishes the will as of the date of the codicil.

Revocation

A will can be revoked by:

• Physical act: Burning, tearing, canceling, or destroying with the intent to revoke
• Subsequent instrument: A new will or codicil that expressly revokes the prior will, or that is inconsistent with it
• Operation of law: Divorce generally revokes provisions in favor of the ex-spouse (but not the entire will)

Common Will Doctrines

Lapse and anti-lapse: If a beneficiary predeceases the testator, the gift lapses (fails). Anti-lapse statutes save the gift for the deceased beneficiary's descendants if the beneficiary was a close relative of the testator (typically a grandparent or descendant of a grandparent).

Ademption: If specifically devised property is no longer in the testator's estate at death, the gift fails. A specific devise of "my car" fails if the testator sold the car before death.

Abatement: When the estate is insufficient to pay all devises, gifts are reduced in a specific order: residuary gifts first, then general gifts, then specific gifts.

Incorporation by reference: A document not executed with will formalities can be incorporated into the will if: (1) the will refers to the document, (2) the document was in existence when the will was executed, and (3) the will sufficiently identifies the document.

Intestacy

When a person dies without a valid will, their property passes according to the state's intestacy statute. The typical order:

1. Surviving spouse: Takes a share that varies by state and depends on whether the decedent also left descendants, parents, or siblings
2. Descendants: Take per capita (equal shares at the first generation with living takers) or per stirpes (each branch takes equally)
3. Parents
4. Siblings and their descendants
5. More remote relatives
6. Escheat to the state if no relatives are found

The MBE and MEE test whether you can correctly calculate shares under different distribution methods (per capita at each generation, per stirpes, strict per stirpes).

Trusts

Requirements for a Valid Trust

1. Settlor with capacity and intent to create a trust
2. Trustee (failure to name one does not defeat the trust — the court will appoint one)
3. Identifiable beneficiary (or a valid charitable purpose)
4. Trust property (res): Must be a present, identifiable property interest
5. Valid purpose: Any purpose that is not illegal or against public policy

Types of Trusts

Express trusts: Created intentionally by the settlor, either inter vivos (during life) or testamentary (by will).

Resulting trusts: Implied by law when an express trust fails, is fully performed, or when the settlor contributed trust property but did not intend a gift.

Constructive trusts: An equitable remedy imposed by a court to prevent unjust enrichment, typically when property was obtained through fraud, duress, or breach of fiduciary duty.

Modification and Termination

A trust can be modified or terminated by:

• The settlor, if they reserved the power to revoke or amend
• Agreement of all beneficiaries, if it does not violate a material purpose of the trust (Claflin doctrine)
• The court, upon changed circumstances (equitable deviation)

Under the UTC/Restatement (and the modern trend), a trust is presumed revocable unless it expressly states otherwise.

Fiduciary Duties of the Trustee

Duty of loyalty: The trustee must administer the trust solely in the interests of the beneficiaries. No self-dealing, no conflicts of interest, no commingling trust assets with personal assets.

Duty of prudence: The trustee must invest and manage trust assets as a prudent investor would. Modern law (Uniform Prudent Investor Act) evaluates the portfolio as a whole, not individual investments.

Duty to inform: The trustee must keep beneficiaries reasonably informed about the trust and its administration.

Duty of impartiality: When a trust has multiple beneficiaries (e.g., income to A for life, remainder to B), the trustee must balance the interests of current and future beneficiaries.

Spendthrift Trusts

A spendthrift provision prohibits the beneficiary from voluntarily or involuntarily transferring their interest. Creditors generally cannot reach the trust assets before distribution to the beneficiary. Exceptions: child support and alimony claimants, the IRS, providers of necessities, and tort judgment creditors (in some jurisdictions).

Self-settled spendthrift trusts (where the settlor is also the beneficiary) are generally not valid to protect the settlor's assets from creditors, though a handful of states now allow them with specific requirements (domestic asset protection trusts).

Study Strategy

For wills questions, work through the checklist: was the will validly executed? Was it revoked? Do any of the devises fail (lapse, ademption)? How should the estate be distributed?

For trusts questions: was the trust validly created? What are the trustee's duties? Has the trustee breached? Can the trust be modified or terminated?

Know the intestacy distribution methods and practice calculating shares. The math trips people up more than the law.