ESTATES AND TRUSTS - Stine
FINAL EXAMINATION
FRIDAY, JULY 26, 1991
TWO HOURS AND FIFTEEN MINUTES
I.(45 minutes)
Gordon Phelps was a retired farmer in his late 70s when he died last month. Throughout his life he had used alcohol heavily and in his later years had been hospitalized on three occasions with alcohol related dementia. During these episodes he was extremely disoriented in time and place and sometimes had hallucinations in which he thought persons or animals were trying to hurt him.
Gordon's wife, Sylvia, survived him as did two of their children, Randy and Paula. Their other child, Ray, died in a motorcycle accident in 1986 survived by his wife, Clara, and their sons Eric and Bryan. Randy and Paula each have 2 children as well.
Largely because of Sylvia's disapproval of Gordon's drinking, he and Sylvia have been separated for 10 years though they never divorced. During this time Sylvia has been fully independent financially, operating a 600 acre farm she inherited from her parents. At the same time Gordon continued to farm the farm he had owned since before he and Sylvia were married and which they had lived on until Sylvia moved out. Title to this farm had always been in Gordon's name alone.
Sometime in the early 1980s Gordon became acquainted with Faye Kendall, who was then in her early 30s. She had grown up on a farm and had helped with its operation from an early age. She became Gordon's advisor and constant companion almost immediately, advising him an all business decisions and maintaining the books and records of the operation. She also spent most nights at the farm although she always kept a separate residence in town.
Gordon's children disapproved of this relationship and complained greatly to Gordon in the early years. He rebuffed them and in time an uneasy truce on the subject came about. Gordon saw his children and grandchildren as often as once a week since the entire family lived in the same area and made special efforts to do things with Eric and Bryan after Ray's death.
After Gordon's death Faye Kendall produced a will dated July 30, 1989, in which he made devises of $1,000 to each of his grandchildren. In it he also stated that he intentionally left nothing to Sylvia because she was well able to provide for herself. The will made no mention at all of Gordon's children. The residue of his estate he gave to Faye.
This will, which was properly executed, was drafted by James Davis, a lawyer who practices in a town some 40 miles from Gordon's farm. Gordon told some of his friends that he went so far from home because his old lawyer and most other local people did not approve of what he wanted to do with his property. He also told these friends that he had gone to Davis at the suggestion of Faye; it seems that she and Davis had gone to high school together.
Gordon also told these friends that he knew that his abuse of alcohol had caused a number of health problems that would probably shorten his life, but that he was comfortable with the thought of death and had made provision in his will which would help assure a good end to his life. He explained that he had left one half of his estate to Faye, but had given the other one half to the First Baptist Church which he had attended regularly for many years.
Davis is willing to testify that Gordon did instruct Davis to draft a will leaving the residue equally to Faye and the church, but that his secretary had made the error failing to include the church when she typed the will. Davis failed to proofread the will and when Gordon asked him before executing the will whether it was as Gordon had requested, Davis had mistakenly told him that it was.
What are the rights of the various parties in Gordon's estate?
II. (45 minutes)
A. (15 minutes) Nora Charles died leaving a will which created a trust for the primary benefit of her husband, Nick. By the terms of this trust, the trustee was directed to pay all of the income and so much of the principal as it deemed advisable in its sole discretion to Nick. Upon Nick's death or remarriage the trust was to terminate and the property was to be distributed to Nora's issue who were then living, per stirpes.
Nick recently married Marie Roget and immediately petitioned the court for an order declaring the provision of the trust which terminates it upon his remarriage void as against public policy. The court issued an order finding the provision invalid and ordering the trustee to continue the trust under the same terms as before his remarriage. You represent the issue of Nora and have filed an appeal of the lower court's order. What arguments do you advance for reversal?
B. (15 minutes) Will Power devised property to a trustee to pay income to his son, Tyrone, until Tyrone reaches the age of 40 at which time the trust will terminate and the property be distributed to Tyrone outright. If Tyrone dies prior to attaining 40 without issue then living, the property is instead to go to Will's brother, Mann. Tyrone died at age 37 survived by his two children, Mary and Grant. He left a valid will in which he left his entire estate to his friend, Errol. Who is entitled to the trust property?
C. (15 minutes) Terry Graves died leaving a will which contained the following provision:
I give $50,000 in equal share to my brothers, Larry and Gary, or to the survivor of them.
Terry and Gary were on a fishing trip when their car which Gary was driving crossed the centerline of the highway and was hit head-on by a large truck. Both were killed instantly. Gary had a son, Allen, who survived him and Terry. Larry also survived Terry. Who gets the $50,000?
III. (45 minutes)
A.(15 minutes) Minnesota recognizes the validity of spendthrift provisions in making an interest in trust inalienable by the beneficiary and beyond the reach of his or her creditors. Assume that you represent a creditor who has supplied medical care to the income beneficiary of a spendthrift trust and have filed a petition in the court having jurisdiction over the trust seeking an order that the trustee pay the income directly to you to pay off the beneficiary's obligation. Both the trial court and the court of appeals followed precedent and upheld the trustees refusal to pay your client directly. What arguments would you make in the Supreme Court of Minnesota to convince it to hold for your client?
B. (15 minutes) Testator's will devised "my car to my friend, Matt, and my house to my sister, Farah." The will contained no residuary clause. After the will was executed, Testator crossed out the words"to my friend, Matt," so that the provision looked like this:
I give my car to my friend, Matt, and my house to my sister, Farah.
Testator died survived by her son, Willie, by Matt, and by Farah. Who is entitled to the car?
C. (15 minutes) The 1990 version of the Uniform Probate Code contains the new section 2-503 which was handed out in class and is attached. Would you favor the adoption of this statute in Minnesota? Why or why not?