Components of Wills

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Terms:


Integration:
Determination of what papers constitute the testator’s will.

Incorporation by reference:
When the testator, by provision in his will, has legally reached out and caused another document, such as a memorandum, to become part of the will.

Pour-over:
Provision in a will which directs the distribution of property into a trust.

Residue:
The surplus of a testator’s estate remaining after all the debts, taxes, costs of administration and particular legacies have been paid.

Integration

On occasion it is necessary to determine what papers actually constitute the testator’s will, particularly if a testator has more than one will.

EXAMPLE: Patrick has four children. The first will he drafted left the family farm to his son, Sean. A second will left the family’s country home to his daughter, Amelia. A third will left the beach home to his son, Stefan. Lastly, a fourth will left a townhouse and all of the residue of his property to his son, Fernando. Patrick dies. All four of the aforementioned wills together constitute Patrick’s last will and testament, since they are wholly consistent with each other and none contains a clause that revokes any of the other wills.

Incorporation by reference

Sometimes a testator wishes to use other documents to supplement the provisions of the will. Inclusion of these other documents in reading the will is known as “incorporation by reference.” For this concept to apply, the following must be established:

  • that the extraneous material was in existence at the time of the making of the will;
  • that the will on its face refers to such material as being in existence at the time of the making of the will and shows intention to incorporate it; and
  • that the extraneous material offered as part of the will is the identical material referred to or described in the will.

EXAMPLE: Dexter executed his will in 1998 naming his son, Patrick, the executor and principal beneficiary of any personal property except that property designated by a list of bequests contained in a notebook (his memorandum), known to Patrick or in accord with Dexter’s wishes as expressed during Dexter’s lifetime. The notebook was first created in 1972 and subsequently modified periodically. Most of the property was left to his grandchildren, Sean, Amelia, Stefan and Fernando. However, Dexter was very friendly with his neighbor, Arturo, who was a professor of art at the local university. Dexter’s notebook contained a bequest of a Picasso painting to Arturo. Before his death in 2001, Dexter had changed some bequests and ratified his will a couple of times via codicils. Although Patrick was given the notebook as a guide in administering the estate, he refused to give Arturo the painting. Arturo commenced an action to compel Patrick to deliver the painting. The probate court found for Arturo, stating that Dexter intended to give the painting to Arturo, the notebook was a memorandum within the meaning of Dexter’s will, the notebook existed at the time the will was made, the codicils ratified the language of the will and the notebook was incorporated by reference into the terms of the will. Accordingly, Arturo was entitled to the painting. See, e.g., Clark v. Greenhalge, 411 Mass. 410 (1991).

Doctrine of independent significance

A testator may refer to some unrelated act or event that has some independent significance (i.e., not testamentary in nature), for the purpose of either designating the beneficiaries or the property to be given away via the will. The crucial question is whether the act has a legal significance apart from and independent of its impact on the will. This is because the extrinsic act must not have a testamentary function. Testamentary actions (actions that cause the disposition of property after death) must be written into the will, or they are void.

EXAMPLE: Kevin started a business 25 years ago. Many of the employees who started with him then still work for him today. To show his appreciation for the loyalty of his employees, Kevin’s will bequeathed “$2,000 to each person employed in his business at the time of his death.” This is a valid designation because the testator’s hiring or firing of employees is normally done for business reasons rather than as a means to designate beneficiaries in a will. Thus, Kevin’s employment policy has “independent significance” and not a testamentary purpose. See, e.g., Shoup v. American Trust Co., 97 S.E.2d 111 (N.C. 1957); Welch v. Trustees of Robert A. Welch Foundation, 465 S.W.2d 195 (Tex. 1971).

The acts can be those of the testator or they can come from another person. See, e.g., Jeffreys v. Glover, 50 S.E.2d 328 (Ga. 1948); In re Evan’s Estate, 133 N.E.2d 128 (Ohio 1956); First National Bank v. Klein, 234 So. 2d 42 (Ala. 1970).

EXAMPLE: Renée’s will devises “the car that I own at my death” to the beneficiaries in my brother, Roger’s will. At the time she executed the will, Renée owned a 15-year-old Toyota (value $2,000). Shortly before her death, Renée had sold the Toyota and purchased a Mercedes (value $55,000). This is a valid designation because Renée’s motive for buying the car was to own and drive a Mercedes; not to have an effect on her will. In addition, the designation of the beneficiaries in Roger’s will was also permitted, since acts by a third party are an acceptable part of the doctrine of independent significance. Thus, the beneficiaries of Roger’s will get the Mercedes at the time of Renee’s death.

Testamentary gifts to a trust

A testamentary gift to a trust (a gift straight from a will to a trust) is also known as a “pour-over gift.” This pour-over gift is a testamentary gift to a trust created during the decedent’s lifetime (inter vivos trust), with the testamentary assets to be administered and distributed as part of that trust. The trust can be established either before or concurrently with the will creation. A will that states that the money passing under it should go to a trust is sometimes known as a “pour-over will.”

The purpose of this type of arrangement is to provide for the streamlined disposition and management of assets transferred to the trust during the testator’s lifetime and assets owned by the testator at death. The result is that both sets of assets end up in the same trust.

EXAMPLE: The wills of Patricia and her husband, Antonio, give the residue of their estates to a revocable trust created before the execution of their wills. Subsequently, the trust is amended (its terms are changed). The issue is this case was whether the residue passed to the trustees under the terms of the original or amended trust. The court held that the property should be distributed according to the terms of the amended trust. The amended trust was valid, although it lacked the usual formalities needed for executing a will, due to the applicability of the doctrine that acts of independent significance are valid even without such formalities. See, e.g., Second Bank-State Street Trust Co. v. Pinion, 170 N.E.2d 350 (Mass. 1960).

We will study the mechanics of creating inter vivos trusts in more detail in a later chapter. 



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