Deck 49: Trusts and Wills

Question 1

Grace Peterson, a spinster then aged seventy-four, asked Chester Gustafson, a Minneapolis attorney, to draw a will for her. Gustafson, who had also probated Peterson's sister's estate, drew this first will and six subsequent wills and codicils free of charge because he claimed that she had no money to pay for his services. Over the five-year period during which Gustafson redrew Peterson's will, an increasing amount of property was devised to Gustafson's children, until, finally, the seventh will so devised Peterson's entire estate. Peterson, however, hardly knew the children except from several chance encounters ten years before. She died five years later, without ever having changed the seventh will, and Gustafson, who was named as executor, now seeks to have the will admitted to probate. Discuss whether the seventh will should be probated.

Answer 1

Case summary:
GP wrote a will when he was aged seventy -four with a help of an attorney G. Instead a paying he drafted a codicil for the children of G. the seventh will was drafted but before probating the will GP expired.
Wills:
A written document which gives information about disbursement of the belongings after the death of the creator is termed as will. A will should always has the following and it must be written and signed by the creator and witnesses
Justification:
In the above mentioned case, the will which is created by GP at his last moment of life was not probated and that is not valid legally. Therefore, the wills which were probated legally before his death by GP is enforceable.

Question 2

By his last will and testament, Henry Nussbaum made a residual bequest and devise of his estate to his niece, Jane Blair, as trustee, in trust for the education of his grandchildren. If the trust could not be fulfilled, the residue was to revert to the plaintiff, Dorothy Witmer. After Nussbaum died in 2001, the plaintiff contended that the trustee had breached her fiduciary duty by failing to invest the trust corpus. A considerable portion of the trust funds were held in a checking account from 2004 to 2013. The trustee claimed that the will failed to specify when and what investments were to be made and, hence, such matters were left to her good-faith discretion. She also explained the large checking account balances by the fact that she thought she would need access to the funds to pay for college in the near future. Decision?

Answer 2

Case summary:
HN drafted a will along with residual clause to his niece. A trustee JB was also appointed to carry on the education of the grandchildren. HN died and JB was contended by DW the plaintiff of the will for her carelessness in investing the funds earned from 2003-2014. JB argued that will is silent about the investment and it can be taken care by her.
Wills:
A written document which gives information about disbursement of the belongings after the death of the creator is termed as will. A will should always has the following and it must be written and signed by the creator and witnesses
Justification:
In the above mentioned case, HN drafted the will just to distribute the assets which she has and to safeguard the education of the grandchildren. The will is silent about the residual income and the way it should be invested. Therefore, JB has right to form the investment pattern of the corpus fund.

Question 3

Rodney Sharp was a fifty-six-year-old dairy farmer whose education did not go beyond the eighth grade. Upon the death of his wife of thirty-two years, Sharp developed a very close relationship with Jean Kosmalski, a schoolteacher sixteen years his junior. Sharp eventually proposed to Kosmalski, but when she refused, he continued to make gifts to her in hope of changing her mind. He also gave her access to his bank account, from which she withdrew substantial amounts of money; made a will naming her as sole beneficiary; and executed a deed naming her as a joint owner of his farm. Then, in September 2011, Sharp transferred his remaining joint interest in the farm to Kosmalski. In February 2013, Kosmalski ordered Sharp to move out of his home and to vacate the farm. She then took possession of both, leaving Sharp with assets of $3,000. Discuss whether a constructive trust should be imposed on the property transferred to Kosmalski.

Answer 3

Case summary:
RS a dairy farmer transferred all his properties slowly to JK a school teacher after the death of his wife. JK after receiving all the properties asked RS to go out of the home with $3,000.
Constructive trust:
A trust formed with understood conditions that if the act for which the transfer of property is made is not performed by the transferee then the property will automatically retransferred to the transferor is known as constructive trust.
Justification:
In the above mentioned case, RS believed that JK will support him in the hard times and transferred all his assets to her. But JK cheated RS just accepted the property and sent him out of the home. Therefore, through constructive trust the properties of RS may be taken back from JK.

Question 4

When Should Life Support Cease?
FACTS Marge Hilton, an inhalation therapist at Lankard Hospital, was recently assigned to a unit that has been treating Leslie Andrews. Andrews, a single, twenty-eight-year-old woman, was in a car accident two weeks ago and remains in a coma. All of her nutrition and hydration must be administered through a gastrostomy tube. Andrews, who was a dental assistant, has no known relatives, nomedical insurance, and no significant assets.
Her medical condition offers no hope for recovery. Andrews does not have a living will, and the only evidence concerning whether she would wish to have life-sustaining efforts continued is a casual statement, related to Lankard's administrator by two of her friends, that she ''would not want to live like that.'' She had said this after the three attended a movie in which a young female character had been comatose for many years.
When Hilton was performing inhalation therapy for Andrews, she observed Andrews groan. She brought this to the attention of two physicians. The doctors explained that this did not indicate Andrews was showing signs of recovery or was regaining consciousness. The doctors did state that the patient may be experiencing discomfort, but reassured Hilton that properly administered medication should take care of any pain.
Social, Policy, and Ethical Considerations
Under what circumstances should life-sustaining mechanisms be removed? Who should make the decision?

Question 5

John Hobelsberger lived alone on his farm near Kranzburg, South Dakota. A grandniece, Phyllis Raml, and her husband, Ralph, lived on and operated a farm about two miles away. Hobelsberger and the Ramls had a friendly and cordial relationship. The Ramls visited him rather frequently and largely cared for him during his later years. Hobelsberger was hospitalized on October 23 and his condition was diagnosed as intermittent cerebral insufficiency. During his hospitalization, he requested that the Ramls send an attorney to see him about the preparation of a will. Thomas Green, an attorney, interviewed the testator on or about November 10 and prepared a will in compliance with his instructions.
Hobelsberger was transferred to a nursing home on November 19. On November 22, Green and a secretary went to the nursing home and witnessed his signing of the will. Hobelsberger was then eighty years old. He subscribed the will with a mark because he was having trouble with his hands. Hobelsberger died on July 19 of the following year, survived by twenty-seven nieces and nephews and seven grandnieces and grandnephews. The will, after providing for the payment of debts and funeral expenses, left Hobelsberger's entire estate to Phyllis Raml. Nine of the nieces and nephews contested the will, claiming lack of testamentary capacity, undue influence by the Ramls, and improper execution. The county court admitted the will to probate, the circuit court affirmed, and the contestants appealed. Decision?

Question 6

State whether or not a trust is created in each of the following situations:
a. A declares herself trustee of ''the bulk of my securities'' in trust for B.
b. A, the owner of Blackacre, purports to convey to B in trust for C ''a small part'' of Blackacre.
c. A deposits $100,000 in a savings bank. He declares himself trustee of the deposit in trust to pay B $50,000 out of the deposit, reserving the power to withdraw from the deposit any amounts not in excess of $50,000.

Question 7

Mamie Henry, a widow, died leaving no children but she was survived by several nieces and nephews. At first no will was found, and Joe Barksdale, a nephew, was appointed administrator of Mrs. Henry's estate. Later, Rita Pendergrass produced a copy of a will allegedly made by Mrs. Henry. The will left all of Mrs. Henry's property to Mrs. Pendergrass and appointed her as executrix. When Mrs. Pendergrass sought to have the will admitted to probate, Joe Barksdale and Olen Barksdale filed a contest on the grounds that the purported will was never duly executed, or, if executed, was destroyed by Mrs. Henry prior to her death. Should the will be probated? Explain.

Question 8

Upon George Welch's death, he was survived by his third wife, Dorothy Welch, and his daughter by his first marriage, Patricia Fisher. At the time George and Dorothy were married, George was in very poor health and he relied on Dorothy to care for him. George was suicidal and an alcoholic and suffered from severe depression. During the eight months George and Dorothy were married, George became isolated from his family and his health deteriorated. Prior to his death, George transferred the bulk of his assets to Dorothy. Dorothy assisted in the transfer of George's assets and often completed checks and other papers for George's signature. Although George and Dorothy had executed a prenuptial agreement, during the month preceding his death George made a new will that named Dorothy as his sole beneficiary. Patricia had been the sole beneficiary of his prior will. Through the transfers of assets and the new will, Dorothy received $570,000.
a. What are the arguments that Patricia is entitled to the $570,000?
b. What are the arguments that Dorothy is entitled to the $570,000?
c. Who should prevail? Why?

Question 9

George Washington Croom died testate. In his will Croom left various bequests of real and personal property to his children and a grandchild. In Item Eight of his will Croom stated ''I leave nothing whatsoever to my daughter Kathryn Elizabeth Turner, and my son Ernest Edward Croom.'' At his death, Croom also left three optional share certificates in Carolina Savings and Loan Association issued to George W. Croom or Kimberly Joyce Croom, the deceased's minor daughter. Each of these certificates had attached to it an ''Agreement Concerning Stock in Carolina Savings and Loan Association,'' which purported to create a joint account with a right of survivorship. Two of these agreements were signed by George Croom only and the third agreement was not signed at all. None of these certificates were specifically devised by Croom's will and the will contained no residuary clause. Who is entitled to share in these assets?

Question 10

When Should Life Support Cease?
FACTS Marge Hilton, an inhalation therapist at Lankard Hospital, was recently assigned to a unit that has been treating Leslie Andrews. Andrews, a single, twenty-eight-year-old woman, was in a car accident two weeks ago and remains in a coma. All of her nutrition and hydration must be administered through a gastrostomy tube. Andrews, who was a dental assistant, has no known relatives, nomedical insurance, and no significant assets.
Her medical condition offers no hope for recovery. Andrews does not have a living will, and the only evidence concerning whether she would wish to have life-sustaining efforts continued is a casual statement, related to Lankard's administrator by two of her friends, that she ''would not want to live like that.'' She had said this after the three attended a movie in which a young female character had been comatose for many years.
When Hilton was performing inhalation therapy for Andrews, she observed Andrews groan. She brought this to the attention of two physicians. The doctors explained that this did not indicate Andrews was showing signs of recovery or was regaining consciousness. The doctors did state that the patient may be experiencing discomfort, but reassured Hilton that properly administered medication should take care of any pain.
Social, Policy, and Ethical Considerations
How would your answer change if Andrews were discovered to be six months pregnant?

Question 11

FACTS Willie Mae Arant executed her Last Will and Testament on August 5, 1992, in her home with two witnesses present. The original will could not be found after Arant's death, so a copy of the will was filed and admitted in Calhoun County Probate Court. The will left the bulk of the estate to Melvin Bolton, Arant's nephew, and Kent Sutcliffe, Arant's grandson. Mary Lou Golini, Arant's only surviving daughter, filed suit challenging the probate of the will on the ground that because the original will could not be found, it had been destroyed with the intent to revoke.
The probate court found Arant's will had not been revoked because it was returned to her attorney's office after it was executed and it was lost sometime after that. Furthermore, the probate court found that Arant thought she had the original in her possession but did not. The probate court found that Arant always indicated where her will was located and copies of her will were found in those locations after her death. Golini appealed to circuit court. The circuit court affirmed the probate court.
DECISION Judgment affirmed.
OPINION Howard, J. All parties agree Arant properly executed her will. The dispute arises over what happened to the original will after its execution. Golini claims the evidence proves Arant was the last person to have possession of her will because the will was executed in Arant's home and the witnesses to the will testified they left the will with Arant after it was executed. Bolton claims, and the lower courts agreed, the evidence tended to show the last verifiable location of the will was in Arant's attorney's office, and therefore, the presumption of animo revocandi [intent to revoke] did not apply.
***
''A will or any part thereof is revoked *** by being burned, torn, canceled, obliterated, or destroyed, with the intent and for the purpose of revoking it by the testator or by another person in his presence and by his direction.'' [Citation.] Revocation by an act or by a subsequent instrument must be accompanied by an intention to revoke, and, without the intention, revocation does not take place. [Citation.]
Generally, contestants of a will have the burden of establishing revocation. [Citation.] However, when the testator takes possession of his will and it cannot be found at his death, the law presumes that the testator destroyed the will animo revocandi [with intent to revoke]. [Citations.]
''This is merely a presumption of fact and may be rebutted by showing by the evidence that the will existed at the time of his death, was lost subsequent thereto, or had been destroyed by another without authority to do so.'' [Citation.]
If the testator was known to have her last will in her possession or had ready access to it, and it cannot be found on her death, it is presumed, rebuttably, that she destroyed it and thereby revoked it. *** [T]he evidence to rebut the presumption most be clear and convincing. ***
From a review of the record, this court finds evidence which reasonably supports the factual findings of the probate court including the fact Arant was not in possession of her will. Both witnesses to the will's execution testified they were the only ones present when Arant signed her will and Arant had possession of the will when they left her home. Arant told the witnesses to the will she intended to have the will taken to her attorney's office.
Attorney Thomas Culclasure drafted two wills for Arant. He prepared the first will, which also excluded Golini, in 1988. He prepared the second will in 1992 after Arant's daughter, Sally, died. The second will Culclasure drafted was picked up from his office. After it was executed, Culclasure testified the will was returned to his office. However, Culclasure said he ''can only assume that the original made it back'' to his office because he had a copy of the executed will. Culclasure stated ''I did not give her the original will, nor did I receive the original will back, personally.''
Culclasure maintained a card file for all wills he drafted in his practice. The card for Arant states that Arant signed her will August 5, 1992, and that ''Mrs. Arant has the original.'' This handwritten notation was written by Culclasure's secretary. Culclasure's practice was to put any original wills he kept in his lock-box at the bank. He searched the lock-box and all his office files but was unable to locate Arant's original will. Culclasure did not know who may have picked up the will from his office but he thought the will had been given to someone.
Kent Sutcliffe, Arant's grandson, testified Arant kept her important papers in a little chest and that she kept a sealed envelope in there which he thought contained her will. Sutcliffe's stepmother, Beth, testified Arant was a very organized person and kept her important papers in a little desk in her dining room. *** After Arant's death, Bolton retrieved the two sealed envelopes from the two locations and took them to the probate court judge to have them opened. Only then did he discover the envelopes contained copies of Arant's will but neither contained the original. Bolton also checked Arant's personal lock-box at the bank but the original will was not there.
''Proof that a testator, whose will cannot be found after his death, entertained a kindly or loving feeling toward the beneficiaries under the will carries weight and tends toward the conclusion of nonrevocation of the will by the testator.'' [Citations.] Numerous witnesses testified as to the love and affection that existed between Arant and Bolton and Bolton's daily visits with Arant as well as his cooking her meals and running her errands. Even Golini testified Bolton was ''like a son'' to Arant. Before she died, Arant gave Bolton her Power of Attorney.
Numerous witnesses also testified that Arant and Golini did not get along and that Arant stated on numerous occasions she intended to leave Golini out of her will.
INTERPRETATION Revocation of a will must be accompanied by an intention to revoke it.
CRITICAL THINKING QUESTION What criteria should be considered in determining whether a lost will was revoked? Explain.

Question 12

Testator gives property to Timothy in trust for Barney's benefit, providing that Barney cannot assign or pledge future trust income. Barney borrows money from Linda, assigning his future income under the trust for a stated period. Can Linda obtain any judicial relief to prevent Barney from collecting this income?

Question 13

FACTS The petitioner, Wilber National Bank, was appointed trustee of a charitable trust created under the will of Frances E. Rowe (decedent). The trust was funded solely by thirty thousand shares of International Business Machines (IBM) common stock, which was trading for approximately $113 per share at the time of decedent's death in April 1989 and approximately $117 per share when the trust was funded in September 1989. Under the terms of the trust, the petitioner was required to make annual distributions to qualified charities of 8 percent of the estate trust assets, or $270,300; at the end of fifteen years, the balance remaining in the trust, if any, was payable to the respondents, who are the decedent's nieces, or their children.
In August 1994, the respondents made a demand that the petitioner file an intermediate accounting, claiming that the petitioner's failure to diversify the trust assets had resulted in a decline in yield and forced sales of trust principal, thereby threatening the assets of the trust. In December 1994, the Surrogate's Court required the petitioner to prepare an intermediate accounting. The petitioner filed its accounting and then commenced this proceeding for a judicial settlement. The respondents objected to the accounting upon the grounds that the petitioner's failure to diversify the trust was imprudent in that it violated the petitioner's own policy requiring diversification, the policy of the Comptroller of Currency, and regulations of the Federal Reserve Bank.
Because the value of the stock had dropped from the time the trust was funded, the Petitioner Trust Committee felt that it would be imprudent to diversify immediately, but gave its approval to a plan of diversifying at a later time when the stock had reached a higher price. In the meantime, the petitioner generated some income by selling various call options, and several small sales and in-kind distributions were made of IBM stock to fulfill the annual payout requirements. The first move toward diversification came in February 1991, when the petitioner sold 5,000 shares of IBM stock at $125 per share and an additional 2,959 shares at $136 per share. As of the close of the accounting period on December 31, 1994, the petitioner still held 19,398 shares of IBM stock valued at $74 per share. Over the course of the accounting period, the market value of the trust assets had dropped from $3,521,250 to $1,853,937.
In August 1997, the Surrogate's Court rendered its decision that, from the period September 8, 1989, to December 31, 1994, the petitioner had been negligent, that it had violated its own policy manual, and that it should have diversified most of the trust's holdings in IBM in January 1990. The Surrogate's Court ordered the petitioner to refund its commissions to the trust and directed that the petitioner pay damages of $496,259, together with $133,990 in interest, for a total of $630,249. The petitioner appealed.
DECISION Judgment affirmed.
OPINION Mercure, J. The evidence adduced at the July 1996 trial of the proceeding to settle petitioner's intermediate account showed that petitioner's own written policy required diversification of the trust assets. At the time of the original funding of the trust in 1989, petitioner's Trust Policy Manual provided:
[I]t is the [Trust] Committee's recommendation that where practicable, the Investment staff follow a balanced and diversified approach in the management of those funds. Any trust accounts not conforming to this principle must be brought to the Committee's attention with supporting data as to the reason for these exceptions.
The policy became even more specific in 1994, then providing:
[I]t is the Committee's recommendation that the Investment staff adhere to the principles of the ''Prudent Investor'' rule by using modern portfolio theory and following a balanced and diversified approach in the management of those funds. Any trust accounts not conforming to these principles must be brought to the Committee's attention with supporting data as to the reason for these exceptions. Exceptions to diversification may be made when an agency customer or the trust instrument specifically permits, or where large capital gains would be incurred, or when the cost basis of the property has the potential to be written up in the near future.
Further, the 1994 policy advised that existing holdings exceeding 10% of a portfolio should be trimmed down over a period of time, supported by several research houses and reviewed annually by petitioner's Trust Committee (hereinafter the Committee).
***
During petitioner's administration of the trust, New York followed the ''prudent person rule'' of investment which provided:
A fiduciary holding funds for investment may invest the same in the kinds and classes of securities described in the succeeding subparagraphs, provided that investment is made only 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. [Citation.]
To determine whether the prudent person standard has been violated, the court should engage in ''a balanced and perceptive analysis of [the trustee's] consideration and action in the light of the history of each individual investment, viewed at the time of its action or its omission to act'' [citations]. All of the facts and circumstances of the case must be examined to determine whether a concentration of a particular stock in an estate's portfolio violates the prudent person standard [citation]. Further, each individual investment decision should be examined in relation to the entire portfolio as an entity [citation], and a trustee can be found to have been imprudent for losses resulting from negligent inattentiveness, inaction or indifference [citation].
At trial, the generalized testimony of Herbert Simmerly, who was petitioner's vice-president and trust officer and a supervisor of the trust, Benjamin Nesbitt, petitioner's senior vice-president and senior trust officer, and investment officers Lynda Peet and Erica Decker was directly contradicted by the testimony of respondent's expert, Loren Ross. Significantly, Ross expressed the strong opinion that petitioner had acted imprudently in failing to diversify the trust's assets immediately upon receipt of the IBM stock, in furtherance of its initial goal of creating a diversified portfolio of fixed income oriented assets and equity or growth assets. According to Ross, both the 15-year duration of the trust and the 8% annual payout requirement made the investment in IBM stock particularly inappropriate. First, IBM's dividends of less than $5 per share fell far short of satisfying the ''extremely heavy burden'' of having to pay out ''an unvarying $270,300 a year'' to charities, thereby requiring that capital be depleted to supplement the shortfall. Second, the extreme volatility and overall downward trend of IBM stock during this period and the fact that IBM itself was undergoing an ''extremely stressful time'' made it unsuitable for fulfilling the trust's investment goals. Moreover, Ross stated that petitioner's tactic of waiting for the IBM stock to rise was based on ''wishful hoping'' and that any hesitancy on the part of petitioner to sell the IBM stock below acquisition costs was a ''cosmetic kind of consideration.'' Finally, Ross testified that the use of call options increased the risk of the portfolio.
In addition to Ross's testimony describing petitioner's decision to delay diversification as unwise and unreasonably risky, the evidence reveals that petitioner failed to follow its own internal protocol during the administration of the trust up to the time of the intermediate accounting, that petitioner failed to conduct more than routine reviews of the IBM stock and that the target prices set for the trust's IBM stock were departmentwide positions affecting many accounts, giving no particular consideration to the unique needs of this particular trust [citation]. Finally, we note that neither adverse tax consequences nor any provision of the trust instrument restricted petitioner's freedom to sell the IBM stock and diversify the trust's investments.
INTERPRETATION A trustee is under a duty to manage trust assets with prudence and care and to act exclusively in the beneficiary's interest.
ETHICAL QUESTION Did the court fairly decide this case? Explain.
CRITICAL THINKING QUESTION What criteria should a court apply in scrutinizing the trustee's use, disposition, and distribution of the trust's assets? Explain.

Question 14

When Should Life Support Cease?
FACTS Marge Hilton, an inhalation therapist at Lankard Hospital, was recently assigned to a unit that has been treating Leslie Andrews. Andrews, a single, twenty-eight-year-old woman, was in a car accident two weeks ago and remains in a coma. All of her nutrition and hydration must be administered through a gastrostomy tube. Andrews, who was a dental assistant, has no known relatives, nomedical insurance, and no significant assets.
Her medical condition offers no hope for recovery. Andrews does not have a living will, and the only evidence concerning whether she would wish to have life-sustaining efforts continued is a casual statement, related to Lankard's administrator by two of her friends, that she ''would not want to live like that.'' She had said this after the three attended a movie in which a young female character had been comatose for many years.
When Hilton was performing inhalation therapy for Andrews, she observed Andrews groan. She brought this to the attention of two physicians. The doctors explained that this did not indicate Andrews was showing signs of recovery or was regaining consciousness. The doctors did state that the patient may be experiencing discomfort, but reassured Hilton that properly administered medication should take care of any pain.
Social, Policy, and Ethical Considerations
If attending physicians must make the decision, should they be subject to civil or criminal liability arising out of their actions?

Question 15

FACTS Barbara Joanne Keeney filed a petition for divorce against her husband, Milton Keeney, and joined her husband's parents as defendants, asserting that her husband had put real property in his parents' names to avoid payment on a prior unrelated judgment against husband. Barbara asserts that the property was marital property and is seeking to establish her rights to the 6.6629 acres tract (Barlow Property), which is presently titled in the name of Milton's parents, Winfred and Ruth Kenney. Barbara claims that Milton, aided by Winfred and Ruth, intentionally avoided direct ownership of real and personal property in Milton's name in order to defraud a creditor with a prior judgment against Milton.
On June 22, 1982, Barbara and Milton were married. Before and during their marriage, Milton was selfemployed in a business known as K-Bar Trailer Manufacturing Company, which built cattle, horse, and flatbed trailers. Barbara worked with her husband on many of his K-Bar ventures. In February of 1983, and without Barbara's knowledge, Milton and his father purchased the Barlow property for $61,700. Although the purchase price was paid directly from the K-Bar checking account-the only checking account Barbara or Milton owned-the property was deeded to Winfred and Ruth.
Barbara and Milton separated in January 1995 and she filed for divorce on April 17, 1995. It was not until then that Milton informed Barbara that his parents actually owned the Barlow property. The trial court imposed a constructive trust, ordered that the real property be sold and the proceeds divided between the husband and wife, and awarded the wife half of the proceeds from the inventory sale. This ruling was appealed.
DECISION Judgment affirmed.
OPINION Acree, J. The rule [of constructive trusts] perhaps is best stated in [citation], wherein, after citing authorities, the Court said:
These texts and authorities state the rule to be that a constructive trust is created by equity regardless of any actual or presumed intention of the parties to create a trust where the legal title to property is obtained through fraud, misrepresentation, concealment, undue influence or taking advantage of one's weakness or necessities, or through similar means or circumstances rendering it unconscionable for the holder of the legal title to retain the property.
When legal title to property has been acquired or held under such circumstances that the holder of that legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee. [Citation.] Constructive trusts are created by the courts ''in respect of property which has been acquired by fraud, or where, though acquired originally without fraud, it is against equity that it should be retained by him who holds it.'' [Citations.] ''The fraud may occur in any form of unconscionable conduct; taking advantage of one's weaknesses or necessities, or in any way violating equity in good conscience.'' [Citations.] In fact, a court exercising its equitable power may impress a constructive trust upon one who obtains legal title, ''not only by fraud or by violation of confidence or of fiduciary relationship, but in any other unconscientious manner, so that he cannot equitably retain the property which really belongs to another[.]'' [Citation.]
It is true *** that Kentucky courts have required the party seeking the imposition of a trust to establish a ''confidential relationship'' with the party upon whom the trust is to be imposed. *** Furthermore, ''[t]he tendency of the courts is to construe the term 'confidence' or 'confidential relationship' liberally in favor of the confider and against the confidant, for the purpose of raising a constructive trust on a violation or betrayal thereof [Citation.]'' ***
A careful review of this matter indicates there is no reason to believe that the circuit court was clearly erroneous in any of its findings of fact. The collaboration of Milton and his parents to avoid execution of the Smith judgment unquestionably falls in that category of behavior described variously in our case law as ''unconscientious,'' ''unconscionable,'' and ''violating equity in good conscience.'' *** Winfred's and Ruth's efforts to hide Milton's beneficial ownership of property from Mary Smith had an obvious and even greater dispossessory effect on Barbara than it had on its target.
Even if defrauding Barbara of her beneficial interest was not Winfred's and Ruth's original intention, it became so when she decided to divorce their son. Their retention of the property thus deprived Barbara of her beneficial ownership of the marital residence. [Citation.]
In this case, the trial court found that Winfred and Ruth placed the Barlow property in their names to conceal the identity of the beneficial owners; that Barbara and Milton were the beneficial owners of the subject property; that Barbara and Milton paid for the property; and that Winfred (or Winfred's estate) and Ruth would be unjustly enriched by retaining it. We cannot say that the circuit court's creation of a constructive trust, or its finding of any of the underlying facts necessary to support it, are clearly erroneous.
INTERPRETATION Courts create constructive trusts where the legal title to property has been acquired by fraud, misrepresentation, concealment, or undue influence or where it is against equity that it should be retained by the person with legal title to the property.
CRITICAL THINKING QUESTION When should a court impose a constructive trust? Explain.

Question 16

Collins was trustee for Indolent under the will of Indolent's father. Indolent, a middle-age doctor, gave little concern to the management of the trust fund, contenting himself with receiving the income paid to him by the trustee. Among the assets of the trust were one hundred shares of ABC Corporation and one hundred shares of XYZ Corporation. About two years before the termination of the trust, Collins purchased the ABC stock from the trust at a fair price and after a full explanation to Indolent. At the same time but without saying anything to Indolent, he purchased the XYZ stock at a price higher than its current market value. At the termination of the trust, both stocks had advanced in market value well beyond the prices paid by Collins, and Indolent demanded that Collins either account for this advance in the value of both stocks or replace the stocks. What are Indolent's rights?

Question 17

FACTS Debra Prine challenged the validity of her father's will on the grounds that he lacked testamentary capacity and was operating under undue influence. Testator Melvin H. Blanton's 1990 will and family trust divided the majority of his assets equally among his four surviving children and a granddaughter who was the child of his deceased daughter. In August 2008, Blanton met with his attorney and directed him to change his will and trust to exclude Debra Prine, his one surviving daughter. On September 17, 2008, while in the hospital, Blanton executed a new will and trust that left most of his property to his three sons through the Blanton Trust and excluded Debra Prine as a beneficiary. The following day, Blanton was placed in intensive care. He was discharged three weeks later to hospice care and died in February 2009. Blanton's sons and co-executors, Timmy M. Blanton and Greg Blanton, filed a petition to probate the will. Following a bench trial, the probate court found that Melvin Blanton was of sufficient sound and disposing mind and was not subjected to undue or illegal influence at the time he executed his will and trust amendment. Debra Prine appealed to the superior court, and the executors filed a motion for summary judgment, which the superior court granted.
DECISION Judgment of the superior court affirmed.
OPINION Hunstein, J. A testator possesses the mental capacity to make a will if he understands that he is executing a document that will dispose of his property after death, is capable of remembering the property that is subject to his disposition and the persons related to him by blood and affection, and '''has sufficient intellect to enable him to have a decided and rational desire as to the disposition of his property.''' [Citation.] ''The controlling question … is whether the testator had sufficient testamentary capacity at the time of executing the will.'' [Citation.]
***
In this case, the propounders [supporters of the will] presented the affidavit of the attorney who drafted and witnessed the will stating that Blanton was of a sufficient sound and disposing mind and memory at the time he instructed the attorney on how to prepare the will and at the time he executed it. The other subscribing witness and the notary public who executed the self-proving affidavit attached to the will also verified that Blanton knew he was signing his last will and testament and he appeared to be of sound and disposing mind and memory at the time.
His treating physician testified in a deposition that during office visits in 2008 Blanton was ''sharp as a tack,'' showing no symptoms of mental instability, confusion, dementia, hallucinations, or declining mental condition. Blanton was admitted to the hospital on September 15, 2008, after he complained of abdominal pain and fever. Two days later he executed the new will and trust amendment. His physician testified that Blanton was his usual self on the morning the will was executed, his condition was improving, and his medications would not have affected his mental ability. During his rounds on the following morning, the physician found that Blanton had declined sharply and referred him to a specialist for a neurology consultation and admitted him into the hospital's intensive care unit.
***
The caveator [opponent of the will] *** relies on the affidavits of four lay witnesses. These witnesses either did not see Blanton until after he was admitted into intensive care or were vague about when they had seen him confused or hallucinating. The caveator testified that she did not see her father in the hospital until after work on the day he executed his will, he knew who she was at that time, and she had no knowledge of his mental condition earlier in the day. Evidence that the testator was aged, ill, and in pain when he executed his will or that his medical condition deteriorated while he was in the hospital does not show lack of testamentary capacity to make a will. *** Construing the evidence in this case in the light most favorable to the caveator, she has not presented a genuine issue of material fact that the testator lacked the requisite mental capacity when he signed his will.
To invalidate a will, undue influence must amount to deception or coercion that destroys the testator's free agency. [Citation.] The testator's choice of naming one relative instead of another as the favored beneficiary is an insufficient reason to deny probate of the will. [Citation.]
The caveator has not presented a genuine issue of material fact on the question of undue influence. Blanton's attorney and the subscribing witnesses attested that they believed he signed his will freely and voluntarily. His treating physician and other witnesses described the testator as strong-willed, stubborn, opinionated, and not susceptible to influence. There is no evidence that the propounders exerted any power or control over Blanton, coerced him into signing the will, or prevented the caveator and others from visiting him in the hospital or at his home. ***
INTERPRETATION A testator possesses the mental capacity to make a will if he understands that he is executing a document that will dispose of his property after death, is capable of remembering the property that is subject to his disposition and the persons related to him by blood and affection, and has sufficient intellect to enable him to have a decided and rational desire as to the disposition of his property; to invalidate a will, undue influence must amount to deception or coercion that destroys the testator's free agency.
ETHICAL QUESTION Did the court fairly decide this case? Explain.
CRITICAL THINKING QUESTION Do you agree with the court's definition of mental capacity to make a will? Explain.

Question 18

Joe Brown gave $350,000 to his wife, Mary, with which to buy real property. They orally agreed that title to the real property should be taken in the name of Mary Brown but that she should hold the property in trust for Joe Brown. There were two witnesses to the oral agreement, both of whom are still living. Mary purchased the property on September 2, and a deed to it with Mary Brown as the grantee was delivered.
Mary died ten years later, without a will. The real property is now worth $1 million. Joe Brown is claiming the property as the beneficiary of a trust. Mary's children are claiming that the property belongs to Mary's estate and have pleaded the statute of limitations and the statute of frauds as defenses to Joe's claim. There is no evidence to prove whether Mary would or would not have conveyed the property to Joe during her lifetime if she had been requested to do so. What are Joe's ownership rights to this particular real property?

Question 19

On March 10, John Carver executed his will, which was witnessed byWilliam Hobson and Sam Witt. By his will, Carver devised his farm, Stonecrest, to his nephew, Roy White. The residue of his estate was given to his sister, Florence Carver.
A codicil to his will executed on April 15 of that year, provided that $50,000 be given to Carver's niece, Mary Jordan, and $50,000 to Wanda White, Roy White's wife. The codicil was witnessed by Roy White and Harold Brown. John Carver died on September 1, of that year, and the will and codicil were admitted to probate. How should Carver's estate be distributed?

Question 20

Edwin Fuller, a bachelor, prepared his will in his office. The will, which contained no residuary clause, provided that one-third of his estate would go to his nephew, Tom Fuller, one-third to the city of Emanon to be used for park improvements, and one-third to his brother, Kurt.
He signed the will in his office and then went to the office of his nephew, Tom Fuller, who signed the will as a witness at Edwin's request. No other persons were available in Tom's office, so Edwin then went to the bank, where Frank Cash, the cashier, also signed as a witness at Edwin's request. In each instance, Edwin stated that he had signed the document but did not state that it was his will.
Edwin returned to his office and placed the will in his safe. Subsequently, Edwin died, survived by Kurt, his only heir-at-law. How should the estate be distributed?

Question 21

Arnold executed a one-page will in which he devised his farm to Burton. Later, after a quarrel with Burton, Arnold wrote the words ''I hereby cancel and revoke this will /s/ Arnold'' in the margin of the will but did not destroy the will. Arnold then executed a deed to the farm, naming Connie as grantee, and placed the deed and will in his safe. Shortly afterward, Arnold married Donna, with whom he had one child, Ernest. Arnold died some time later, and the deed and will were found in his safe. Burton, Connie, and Ernest claim the farm, and Donna claims dower. Discuss the validity of each claim.

Question 22

The validly executed will of John Dane contained the following provision: ''I give and devise to my daughter, Mary, Redacre for and during her natural life and, at her death, the remainder to go to Wilmore College.'' The will also provided that the residue of his estate should go to Wilmore College. Thereafter, Dane sold Redacre and then added a validly executed codicil to his will, ''Due to the fact that I have sold Redacre, which I previously gave to my daughter, Mary, I now give and devise Blackacre to Mary in place and instead of Redacre.''
Another clause of the codicil provided: ''I give my onehalf interest in the oil business that I own in common with William Steele to my son, Henry.'' Subsequently, Dane acquired all of the interest in the oil business from his partner, Steele, and, at the time of his death, Dane owned the entire oil business. The will and codicil have been admitted to probate.
a. What interest, if any, does Mary acquire in Blackacre?
b. What interest, if any, does Henry acquire in the oil business?

Question 23

Leonard Wolfe was killed in an automobile accident while driving his Toyota Camry. The car was rendered a total loss, and Wolfe's insurance carrier paid his estate $17,550 for damage to the vehicle. Under the terms of Wolfe's will, any car owned at his death was to be given to his brother, David. Wolfe's daughter, Carol, however, brought an action, claiming that the gift of the car to David was adeemed by its total destruction and that she, as the residuary legatee under the will, was entitled to the insurance proceeds. Who is entitled to the insurance proceeds?