1.
Will and testament
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For the devolution of property not disposed of by will, see inheritance and intestacy. Thus, the word will validly applies to personal and real property. A will may also create a testamentary trust that is only after the death of the testator. Throughout most of the world, disposal of an estate has been a matter of social custom, according to Plutarch, the written will was invented by Solon. Originally it was a device intended solely for men who died without an heir, the English phrase will and testament is derived from a period in English law when Old English and Law French were used side by side for maximum clarity. Other such legal doublets include breaking and entering and peace and quiet, the conception of the freedom of disposition by will, familiar as it is in modern England and the United States, both generally considered common law systems, is by no means universal. In fact, complete freedom is the rather than the rule. Civil law systems often put some restrictions on the possibilities of disposal, advocates for gays and lesbians have pointed to the inheritance rights of spouses as desirable for same-sex couples as well, through same-sex marriage or civil unions. Opponents of such advocacy rebut this claim by pointing to the ability of same-sex couples to disperse their assets by will, types of wills generally include, nuncupative - oral or dictated, often limited to sailors or military personnel. Holographic will - written in the hand of the testator, in many jurisdictions, the signature, self-proved - in solemn form with affidavits of subscribing witnesses to avoid probate. Notarial - will in public form and prepared by a civil-law notary, servicemans will - will of person in active-duty military service and usually lacking certain formalities, particularly under English law. Reciprocal/mirror/mutual/husband and wife wills - wills made by two or more parties that make similar or identical provisions in favor of each other, unsolemn will - will in which the executor is unnamed. Will in solemn form - signed by testator and witnesses, some jurisdictions recognize a holographic will, made out entirely in the testators own hand, or in some modern formulations, with material provisions in the testators hand. The distinctive feature of a holographic will is less that it is handwritten by the testator, in Louisiana this type of testament is called an Olographic or Mystic will. It must be written, dated, and signed in the handwriting of the testator. Although the date may appear anywhere in the testament, the testator must sign the testament at the end of the testament, any additions or corrections must also be entirely hand written to have effect. In England, the formalities of wills are relaxed for soldiers who express their wishes on active service, a minority of jurisdictions even recognize the validity of nuncupative wills, particularly for military personnel or merchant sailors. However, there are constraints on the disposition of property if such an oral will is used
2.
Trust law
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A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a settlor, who transfers property to a trustee, the trustee holds that property for the trusts beneficiaries. Trusts exist mainly in common law jurisdictions and similar systems existed since Roman times and this may be done for tax avoidance reasons or to control the property and its benefits if the settlor is absent, incapacitated, or deceased. Trusts are frequently created in wills, defining how money and property will be handled for children or other beneficiaries, the trustee is given legal title to the trust property, but is obligated to act for the good of the beneficiaries. The trustee may be compensated and have expenses reimbursed, but otherwise must turn over all profits from the trust properties, Trustees who violate this fiduciary duty are self-dealing. Courts can reverse self-dealing actions, order profits returned, and impose other sanctions, the trustee may be either an individual, a company, or a public body. There may be a trustee or multiple co-trustees. The trust is governed by the terms under which it was created, in most jurisdictions, this requires a contractual trust agreement or deed. A trust is created by a settlor, who transfers title to some or all of his or her property to a trustee, the trust is governed by the terms under which it was created. In most jurisdictions, this requires a contractual trust agreement or deed and it is possible for a single individual to assume the role of more than one of these parties, and for multiple individuals to share a single role. For example, in a living trust it is common for the grantor to be both a trustee and a beneficiary, while naming other contingent beneficiaries. Trusts have existed since Roman times and have one of the most important innovations in property law. Trust law has evolved through court rulings differently in different states, so statements in this article are generalizations, States are adapting the Uniform Trust Code to codify and harmonize their trust laws, but state-specific variations still remain. An owner placing property into trust turns over part of his or her bundle of rights to the trustee, separating the propertys legal ownership and control from its equitable ownership and benefits. This may be done for tax reasons or to control the property and its benefits if the settlor is absent, incapacitated, testamentary trusts may be created in wills, defining how money and property will be handled for children or other beneficiaries. While the trustee is given legal title to the trust property, in accepting the property title, the primary duties owed include the duty of loyalty, the duty of prudence, the duty of impartiality. A trustee may be held to a high standard of care in their dealings. In addition, a trustee has a duty to know, understand, the trustee may be compensated and have expenses reimbursed, but otherwise must turn over all profits from the trust properties
3.
Administration (probate law)
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In common-law jurisdictions, administration of an estate on death arises if the deceased is legally intestate, meaning they did not leave a will, or some assets are not disposed of by their will. Where a person leaving a will appointing an executor. However, if no will is left, or the will is invalid or incomplete in some way, trust property will also frequently fall outside of the estate but this will depend on the terms of the trust. An administrator acts as the representative of the deceased in relation to land. Consequently, when the estate under administration consists wholly or mainly of land, in the absence of any heir or next of kin, the Crown has the right to property as bona vacantia, and to the land by virtue of the historic land rights of the Crown. The court does this by granting letters of administration to the person so entitled, Grants of administration may be either general or limited. The order in which the court will make grants of letters follows the sequence, The surviving spouse, or civil partner, as the case may be, The next of kin, The Crown, A creditor. On some estates, even under an intestate, it is not clear who are the next-of-kin, in this case the court will make the grant to the person, usually the residuary legatee, with the largest beneficial interest in the estate. Administration de bonis non administratis occurs in two cases, Where the executor dies intestate after probate without having completely administered the estate Where an administrator dies. In the first case the principle of administration cum testamento is followed, Administration durante minore aetate, when the executor or the person entitled to the general grant is under age. Administration durante absentia, when the executor or administrator is out of the jurisdiction for more than a year. Administration pendente lite, where there is a dispute as to the entitled to probate or a general grant of letters the court appoints an administrator till the question has been decided. Probate Administration of Estates Act 1925 Calendars of the Grants of Probate and Letters of Administration Estate planning
4.
Common law
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Common law is the body of law developed from the thirteenth century to the present day, as case law or precedent, by judges, courts, and tribunals. In cases where the parties disagree on what the law is, if a similar dispute has been resolved in the past, the court is usually bound to follow the reasoning used in the prior decision. Resolution of the issue in one case becomes precedent that binds future courts, stare decisis, the principle that cases should be decided according to consistent principled rules so that similar facts will yield similar results, lies at the heart of all common law systems. A common law system is a system that gives great precedential weight to common law. Common law systems originated during the Middle Ages in England, today, one third of the worlds population live in common law jurisdictions or in systems mixed with civil law. The term common law has many connotations, the first three set out here are the most-common usages within the legal community. Other connotations from past centuries are seen, and are sometimes heard in everyday speech. Blacks Law Dictionary, 10th Ed. gives as definition 1,1, the body of law derived from judicial decisions, rather than from statutes or constitutions, CASELAW, STATUTORY LAW. In this connotation, common law distinguishes the authority that promulgated a law. e, examples include most criminal law and procedural law before the 20th century, and even today, most contract law and the law of torts. Interstitial common law decisions that analyze, interpret and determine the fine boundaries. Publication of decisions, and indexing, is essential to the development of common law, while all decisions in common law jurisdictions are precedent, some become leading cases or landmark decisions that are cited especially often. Blacks 10th Ed. definition 2, differentiates common law jurisdictions, by contrast, in civil law jurisdictions, courts lack authority to act if there is no statute. Judicial precedent is given less weight, which means that a judge deciding a given case has more freedom to interpret the text of a statute independently. For example, the Napoleonic code expressly forbade French judges to pronounce general principles of law. As a rule of thumb, common law systems trace their history to England, blacks 10th Ed. definition 4, differentiates common law from equity. This split propagated to many of the colonies, including the United States, for most purposes, most jurisdictions, including the U. S. federal system and most states, have merged the two courts. Additionally, even before the courts were merged, most courts were permitted to apply both law and equity, though under potentially different procedural law. In the United States, determining whether the Seventh Amendments right to a jury trial applies or whether the issue will be decided by a judge, the standard of review and degree of deference given by an appellate tribunal to the decision of the lower tribunal under review
5.
Legal history of wills
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The Ancient Greek practice concerning wills was not the same in all places, some states permitted men to dispose of their estates, others wholly deprived them of that privilege. That they must be men who have arrived to twenty years of age and that they must not be adopted, for when adopted persons died without issue, the estates they received by adoption returned to the relations of the men who adopted them. That they should have no children of their own, for then their estate belonged to these. If they had daughters, the persons to whom the inheritance was bequeathed were obliged to marry them. Yet men were allowed to appoint heirs to succeed their children and that they should be in their right minds, because testaments extorted through the phrenzy of a disease, or dotage of old age, were not in reality the wills of the persons that made them. That they should not be under imprisonment, or other constraint, their consent being then only forced, Wills were usually signed before several witnesses, who put seals to them for confirmation, then placed them in the hands of trustees, who were obliged to see them performed. At Athens, some of the magistrates were often present at the making of wills. Sometimes the archons were also present, sometimes the testator declared his will before sufficient witnesses, without committing it to writing. Thus Callias, fearing to be cut off by a conspiracy, is said to have made an open declaration of his will before the popular assembly at Athens. There were several copies of wills in Diogenes Laertius, as those of Aristotle, Lyco of Troas, the development of Roman law furthered the modern understanding of wills and serves as the foundation to the inheritance law of many European countries, greatly aided later by canon law. The early Roman will differed from the modern will in important respects, the objective, as in adoption, was to secure the perpetuation of the family. This was done by securing the due vesting of the breed in a person who could be relied upon to keep up the family rites. There is much probability in the conjecture that a will was only allowed to be made when the testator had no known gentile relatives, unless they had waived their rights. The Romans were wont to set aside wills, as being inofficiosa, deficient in natural duty, if they disinherited or totally passed by any of the children of the testator. But if the child had any legacy, though ever so small, it was a proof that the testator had not lost his memory nor his reason, which otherwise the law presumed. It is certain from the text of Gaius that the earliest forms of will were made in the comitia calata. The former were published before the comitia, as representative of the patrician genies and these wills were the peculiar privilege of patricians. Codicilli, or informal wills, also came into use and were sufficient for almost every purpose except for appointing an heir
6.
Joint wills and mutual wills
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Neither should be confused with mirror wills which means two separate, identical wills, which may or may not also be mutual wills. A joint will is a document executed by more than one person. Although a single document, the joint will is a distribution of property by each executor. Historically such wills had an important role in ensuring property passed to children of a rather than a widow or widowers spouse on a remarriage. The recognition of these forms varies widely from one jurisdiction to the next, some permit both, some will not recognize joint wills, and many have established a presumption that one or both of these forms creates a will contract. A joint will differs substantively from a mutual will in that the former is not intended to be irrevocable or to express a mutual intention, a will may be both joint and mutual. Mutual wills have four basic requirements and a standard for enforceability. The agreement must be contractual in effect, the agreement must be intended to be irrevocable. The surviving party must have intended the will to reflect the agreement, mutual wills are rare, and often another form of constructive trust is imposed. The major common law authority in this area is Re Oldham Ch.75, astbury J in Oldham distinguished mutual wills from mirror wills - that they are made in identical terms does not go nearly far enough. There must be an arrangement proved to the satisfaction of the court, in the Court of Appeal decision in Goodchild Legatt LJ approved the dicta of Carnwath J and added that for the doctrine to apply there must be a contract. This approach raises problems as will be seen below, however, the contractual requirement has been rejected in other decisions, or at least diluted. Dixon J in Birmingham, commenting on Dufour v Pereira, noted that it is the trust arising from the course of conduct which is enforced and this approach has received further credence in the decision of Blanchard J in Lewis v Cotton. A formal legal contract is not needed, a contract made without formality is enough. The crucial factor must be that the terms of the mutual engagement. Are sufficiently certain that the Court can see its way to enforce them, the importance of this approach is, as Blanchard J notes, that the focus is on the obligation not to deal with property contrary to the agreement rather than on non-revocation. This therefore covers situations such as that in Healey v Browne where there has been an inter vivos transfer to avoid the will, in Healey v Browne a husband transferred assets jointly to himself and his son after the death of his wife. In Olins v Walters 2 WLR1 C. A, once a contract of that kind is established, equity will impose on the surviving testator a constructive trust not to dispose of the property in any other way. Another issue as regards mutual wills is the question of revocability, in Re Hobley Charles Aldous QC held that there could be either unilateral or mutual revocation provided it occurred during the lifetime of both testators
7.
Will contract
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A will contract is a term used in the law of wills describing a contract to exchange a current performance for a future bequest. In such an agreement, one party will provide performance in exchange for a promise by the other party to make a specific bequest to the promisee party in the testators will. Most jurisdictions recognize such contracts as valid, although a few hold them as void against public policy, some jurisdictions will not recognize an oral contract for such a purpose, requiring instead that the contract be executed in writing and signed by both parties. Some jurisdictions require full compliance with the Statute of Wills to be effective, i. e. in writing and this protects the testators very strong freedom to dispose of his property however he sees fit. For example, suppose Joey agrees to execute a will bequeathing his house to Rachel in exchange for services provided by Rachel. If Joey later revokes that will, Rachel can not force Joeys estate to convey the house to her, a married couple with children from an earlier marriage is a good example. It would work the same if she died first, a will contract only becomes irrevocable only at the first partys death. Because of differences in state laws regarding will contracts, an estate planning attorney should be consulted before use of this planning device, the law behind wills becomes tedious when many parties are not present, typically in cases with limited family members. This mainly occurred after World War Two where many wills had no possible recipients so the assets went to the government. Wills are often confused with trust funds, but wills are only present at death whereas trust funds can be accessed during the time that the creator of the fund is still alive
8.
Codicil (will)
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A codicil is a testamentary document similar but not necessarily identical to a will. In some jurisdictions, it may serve to amend, rather than replace, in others, it may serve as an alternative to a will. In still others, there is no recognized distinction between a codicil and a will, the concept of a testamentary document similar to but distinct from a will had its origins in Roman law. In the pre-classical period, a testator was required to name an heir for a will to be valid, failure to name an heir or failure to follow the proper formalities for naming an heir would result in an estate divided by the rules of intestacy. However, if the will did not confirm the codicil, all directives in the codicil were considered fideicommissa, furthermore, a will that did not name an heir could be considered a codicil. Thus, where a testator did not name an heir, his will would be considered a codicil, by the time of the Codex Justinianus, the formal requirements related to wills had relaxed, while requirements for the codicil had become more stringent. There was thus little difference between the formalities for a will and for a codicil, and an invalid will – where, for example and it is acknowledged that classical Roman succession law was highly complicated and to a large extent perplexedly entangled. The codicil remained an entity to a will to varying degrees throughout the Roman-influenced legal world. The concept of heredis institutio was part of the jus commune up until modern times, in the United States, a codicil is a document that changes an existing will. Amendments made by a codicil may alter, explain, add to, subtract from, or confirm – and otherwise amend a will in any way, minor or major. It is subject to the formal requirements as a will
9.
Holographic will
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A holographic will is a will and testament that has been entirely handwritten and signed by the testator. The testator must have had the capacity to write the will. The testator must be expressing a wish to direct the distribution of his or her estate to beneficiaries, holographic wills are common and are often created in emergency situations, such as when the testator is alone, trapped, and near death. Holographic wills often show that the requirements for making a valid will are minimal and it clearly meets the minimum requirements, being his own work and no one elses. On 8 June 1948 in Saskatchewan, Canada, a farmer named Cecil George Harris who had become trapped under his own tractor carved a will into the tractors fender and it read, In case I die in this mess I leave all to the wife. The fender was probated and stood as his will, the fender is currently on display at the law library of the University of Saskatchewan College of Law. Louisiana recognizes holographic wills made outside state under a foreign testament provision, maryland and New York recognize holographic wills only if made by members of the Armed Forces. Indiana and Missouri have no statutes making references to holographic wills, all other states not listed do not recognize a holographic will in any instance. Texas – under the Texas Estates Code, a will written wholly in the handwriting is not required to be attested by subscribing witnesses. Virginia – upon clear and convincing evidence proof the decedent possessed intent to make a valid will, signed by the testator and this is most commonly found in documents written in emergency situations, or those prepared by individuals who have not consulted legal advice. A holographic will is the subject of John Grishams 1999 legal thriller The Testament, serving at a Battalion Aid station under heavy enemy fire, Hawkeye Pierce creates a holographic will in the M*A*S*H episode Where Theres A Will, Theres A War. Autograph Holograph Notary public Signature Keating, Albert The Law of Wills
10.
Oral will
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An oral will is a will that has been delivered orally to witnesses, as opposed to the usual form of wills, which is written and according to a proper format. A minority of U. S. states, permit nuncupative wills under certain circumstances, some states also place limits on the types and value of property that can be bequeathed in this manner. A few U. S. states permit nuncupative wills made by military personnel on active duty, under the law in England and Wales oral wills are permitted to military personnel and merchant seamen on duty and it is common practice for in Commonwealth countries. An analogy can be drawn to the concept of last donations established by Roman law and still in effect in England, dukeminier, Jesse, Johansen, Stanley M. Lindgren, James, and Sitkoff, Robert. Wills, Trusts, and Estates, 8th Edition, p.226
11.
Attestation clause
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In the statutory law of wills and trusts, an attestation clause is a clause that is typically appended to a will, often just below the place of the testators signature. In the United States, attestation clauses were introduced into law with the promulgation of the first version of the Model Probate Code in the 1940s. This attestation clause is modeled on the Model Probate Codes version, Statutes that authorize self-proved wills typically provide that a will that contains this language will be admitted to probate without affidavits from the attesting witnesses. The validity and form of a clause is usually a matter of U. S. state law. Many states allow attestation clauses to be added as codicils to wills that were drafted without them. Affidavit Police oath Testator Testimony Burns Annotated Indiana Statutes, ss
12.
Residuary estate
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It is also known as a residual estate or simply residue. The will may identify the taker of the estate through a residuary clause or residuary bequest. The person identified in such a clause is called the residuary taker, residuary beneficiary, such a clause may state that, in the event all other heirs predecease the testator, the estate would pass to a charity. If no such clause is present, however, the estate will pass to the testators heirs by intestacy. The modern rule, however, is that the failure of a gift to one beneficiary causes that beneficiarys share to be divided among the remaining residuary takers
13.
Incorporation by reference
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Incorporation by reference is the act of including a second document within another document by only mentioning the second document. This act, if properly done, makes the second document a part of the main document. Incorporation by reference is often done in creating laws as well as in law and trust. In law regarding wills, it is a doctrine at common law allows a testator, or a creator of a will. An exception to the first requirement is made for small gifts of personal property, such as household furniture. Oral instructions can not be subject to incorporation by reference, in administrative law, incorporation by reference is a drafting tool that enables federal agencies to give legal effect to materials that are already published elsewhere. This is allowed under a provision of the Freedom of Information Act,5 U. S. C, section 552 requires agencies to publish regulations in the Federal Register in order to enforce them. It is most controversially used to incorporate privately authored voluntary consensus standards into health and safety regulations without infringing the standards developers copyright
14.
Will contest
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Will contests generally focus on the assertion that the testator lacked testamentary capacity, was operating under an insane delusion, or was subject to undue influence or fraud. A will may be challenged in its entirety or in part, only a very few wills are contested, their success rate is less than 1%. Such no-contest clauses are permitted under the Uniform Probate Code, which most American states follow at least in part, however, since the clause is within the will itself, a successful challenge to the will renders the clause meaningless. Many states consider such clauses void as a matter of policy or valid only if a will is contested without probable cause. Will contests are common in the US States than in other countries. and so this article mainly discusses American law. Most other legal traditions enforce some type of forced heirship, requiring that a testator leave at least some assets to their family, particularly the spouse, Chandler tells Monica that he will divorce her if she does not disown Ross, which would humiliate her. Later, Ross tells Monica that Chandler is having an affair with Phoebe, distraught, Monica rewrites her will, disowning both Chandler and Ross. The attorney who drafts the will accidentally writes the gift to Rachel as $500 instead of $5,000 and also accidentally leaves Joey out entirely. Under such facts, Chandler can contest the will as the product of fraud in the inducement, because if the will is invalid, he will inherit Monicas property, as the surviving spouse. Ross can contest the will as the product of Chandlers undue influence, Rachel has standing to contest the will, as she is named in the document, but she will not be permitted to submit any evidence as to the mistake because it is not an ambiguous term. Instead, she will have to sue Monicas lawyer for legal malpractice to recover the difference, finally, Joey is neither someone who stands to inherit from Monica nor named in the will and so is barred from contesting the will altogether. It is a low standard, and one may possess testamentary capacity. Other nations like Germany may have more stringent requirements for writing a will, furthermore, a testator with serious dementia may have lucid periods and then is capable of writing or modifying a will. Undue influence typically involves the accusation that a friend, relative. Such allegations are often linked to lack of mental capacity, someone of sound mind is unlikely to be swayed by undue influence, pressure, manipulation. Mere affection, kindness or attachment of one person for another may not of itself constitute undue influence, however, attorneys are often held to a higher standard and are suspect if they assist in drafting a will that names them as a beneficiary. However, that is dependent on the circumstances of such a relationship, insane delusion is another form of incapacity in which someone executes a will while strongly holding a fixed false belief without hypothesis, having no foundation in reality. In Florida, one of the most-often cited court rulings on insane delusion is from 2006, in this case, the decedent executed a new will in 2005 in the hospital with severe pain and under the influence of a strong medication
15.
Testamentary capacity
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In the common law tradition, testamentary capacity is the legal term of art used to describe a persons legal and mental ability to make or alter a valid will. This concept has also been called sound mind and memory or disposing mind, adults are presumed to have the ability to make a will. In South Africa, however, one acquires testamentary capacity at the age of 16 years, the requirements for testamentary capacity are minimal. Some courts have held that a person who lacked the capacity to make a contract can make a valid will. While the wording of statutes or judicial rulings will vary from one jurisdiction to another, the persons who are the natural beneficiaries The disposition he is making How these elements relate to form an orderly plan of distribution of property. The legal test implies that a claimant in a will contest is a disgruntled heir who believes he or she should have received a larger share than they did under the will. Dead Mans Statutes sometimes restrict evidence which can be admitted concerning transactions with the decedent, the best known or most authoritative text on the common law test for capacity is the judgment of Martin Nourse QC in Re Beaney, deceased 2 All ER595,601, WLR770. When someone gives away a substantial proportion of their assets, the rule is that they must have the same degree of capacity as is required for a will. The degree or extent of understanding required in respect of any instrument is relative to the transaction which it is to effect. In the case of a will the degree required is always high, in the case of a contract, a deed made for consideration or a gift inter vivos, whether by deed or otherwise, the degree required varies with the circumstances of the transaction. Thus, at one extreme, if the subject-matter and value of a gift are trivial in relation to the other assets a low degree of understanding will suffice. Lawyers for people whose testamentary capacity might be called into question often arrange for an execution to be video taped. On video, they ask the testator about his property and about his family, the testamentary capacity matter is most frequently raised posthumously, when an aggrieved heir contests the will entered into probate. Such finding will validate a will that would otherwise be denied probate and this presumption can be rebutted by a challenger to the will showing that there is a real doubt about capacity. At this point the burden of proving capacity moves to the propounder of the will to show that there was testamentary capacity at the time the will was executed. Testamentary capacity Testamentary capacity is the capacity required to make a valid will. The current test comes from the decision in Banks v Goodfellow and this case concerned the validity of the will of John Banks. In modern terms he would most likely be described as a paranoid schizophrenic and he suffered from delusions that he was being persecuted by devils and also by a deceased local grocer
16.
Insane delusion
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A will made by a testator suffering from an insane delusion that affects the provisions made in the will may fail in whole or in part. Only the portion of the caused by the insane delusion fails. Will contests often involve claims that the testator was suffering from an insane delusion, an insane delusion is distinct from testamentary capacity. A testator might be suffering from an insane delusion but otherwise possess the capacity to make a will. Similarly, an insane delusion is distinct from a mere mistake, additionally, while an insane delusion may cause portions of a will to fail, most courts will not reform or invalidate a will because of a mistake unless it was the result of fraud. The insane delusion concept was created in the 1826 British case Dew v. Clark, in that case, a father believed that his daughter was the devil incarnate and disinherited her in his will of 1818. The probate court found that the fathers mindset when he made the 1818 will was normal in all respects except toward his daughter, the court said that this delusion caused the will to fail. In the 1854 case Addington v
17.
Fraud
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In law, fraud is deliberate deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud itself can be a wrong, a criminal wrong or it may cause no loss of money, property or legal right. The purpose of fraud may be monetary gain or other benefits, a hoax is a distinct concept that involves deliberate deception without the intention of gain or of materially damaging or depriving a victim. In common law jurisdictions, as a wrong, fraud is a tort. Proving fraud in a court of law is said to be difficult. In cases of a fraudulently induced contract, fraud may serve as a defense in an action for breach of contract or specific performance of contract. Fraud may serve as a basis for a court to invoke its equitable jurisdiction, in common law jurisdictions, as a criminal offence, fraud takes many different forms, some general and some specific to particular categories of victims or misconduct. The elements of fraud as a crime similarly vary, section 380 of the Criminal Code provides the general definition for fraud in Canada,380. In addition to the penalties outlined above, the court can issue a prohibition order under s.380.2. It can also make an order under s.380.3. The Canadian courts have held that the offence consists of two elements, A prohibited act of deceit, falsehood or other fraudulent means. The Supreme Court of Canada has held that deprivation is satisfied on proof of detriment, prejudice or risk of prejudice, it is not essential that there be actual loss. Deprivation of confidential information, in the nature of a secret or copyrighted material that has commercial value, has also been held to fall within the scope of the offence. The BBC World Service reported in 2012 that the value lost through fraud in the UK was £66 billion a year. According to a review by the UK anti-fraud charity Fraud Advisory Panel business fraud accounted for £144bn, the FAP has been particularly critical of the support available from the police to victims of fraud in the UK outside of London. In July 2016 it was reported that fraudulent activity levels in the UK increased in the 10 years to 2016 from £52 billion to £193bn. This figure would be an estimate, since as the former commissioner of the City of London Police, Adrian Leppard, has said. Donald Toon, director of the NCAs economic crime command, stated in July 2016, Fraud affects one in ten people in the UK
18.
No-contest clause
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The phrase is typically used to refer to a clause in a will that threatens to disinherit a beneficiary of the will if that beneficiary challenges the terms of the will in court. Many states in the United States hold a no-contest clause in a will to be unenforceable, the Uniform Probate Code §§ 2-517 and 3‑905 allow for no contest clauses so long as the person challenging the will doesnt have probable cause to do so. The UPC has been adopted in several states, including Alaska, Idaho, Montana, and New Mexico. These statutes, which comprise Californias statutory scheme governing the enforceability of no-contest clauses, as of that date, the predecessor statutes are repealed. In Florida no-contest clauses in wills are specifically unenforceable, irrespective of probable cause, stat.732.517 which states, A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable. Massachusetts General Laws allow for Penalty Clause for Contest language in wills, a provision in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is enforceable. Nevada law specifically directs the court to enforce no-contest clauses and these statutes recognize that a beneficiary may, without penalty, seek enforcement of the will or trust, seek a judicial ruling as to the meaning of the will or trust. New York has rejected the probable cause defense to enforcement of such clauses, such clauses are given full effect upon challenge. Some exceptions apply, e. g. election against the will by a minor, contest on ground of forgery or revocation by later Will
19.
Lapse and anti-lapse
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Lapse and anti-lapse are complementary concepts under the law of wills, which address the disposition of property that is willed to someone who dies before the testator. At common law, lapse occurs when the beneficiary or the devisee under the will predeceases the testator, the gift would instead revert to the residuary estate or be granted under the law of intestate succession. If the deceased beneficiary was intended to inherit part or all of the estate, then that portion of the estate would pass by intestate succession. Simply put, if there are two parties in the remainder and one has not survived, the entirety of the remainder goes to the surviving residuary devisee or devisees. In such jurisdictions, only a devisee who survives more than 120 hours after the testator is considered to have met this statutory survival test, most common-law jurisdictions have enacted an anti-lapse statute to address this situation. The anti-lapse statute saves the bequest if it has made to parties specified in the statute, usually members of the testators immediate family. For example, the New York anti-lapse statute specifies brothers, sisters, if the anti-lapse statute does indeed apply, then the issue of the deceased beneficiary will inherit whatever was willed to the beneficiary. Another modification to the law of lapse is the elimination of the no residue of a residue rule where multiple beneficiaries are named to inherit the residue
20.
Ademption
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For a devise of a specific item of property, such property is considered adeemed, and the gift fails. General bequests or general gifts - gifts of cash amounts - are never adeemed, if the cash in the testators estate is not sufficient to satisfy the gift, then other assets in the residuary estate will need to be sold to raise the necessary cash. Some property lies in an area, in which the testators specific intent must be determined. Such a gift is deemed to be a demonstrative gift, such demonstrative gifts are deemed to be a hybrid of both specific and general gifts. If one were to bequeath 500 shares of stock, most states would deem that to be a demonstrative gift, the resultant gift to the heir receiving 500 shares, would be the date of death value of 500 shares of that particular stock. Ademption may be waived if the property leaves the estate after the testator has been declared incompetent, furthermore, in some cases the beneficiary will be entitled to the proceeds from the sale of property, or to the insurance payout for property that is lost or destroyed. To avoid confusion as to what may or may not be adeemed, however, the more modern view and the Uniform Probate Code, which has been adopted by some states, disagrees. These jurisdictions find that when property subject to specific devise is placed under contract of sale before the decedents death, many jurisdictions have ameliorated the effects of the common law doctrine by statute. In Wisconsin, state law attempts to abolish the law doctrine of ademption by extinction, by, for example. Similarly, if the shares of stock that existed at the time the gift was made have split, then the beneficiary of that gift will be entitled to the number of shares that exist after the split
21.
Abatement of debts and legacies
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Annuities are also subject to the same rule as general legacies. The order of abatement is usually, Intestate property The residuary of the estate General Devises—i. e, cash gifts from a specific account, stocks, bonds, securities, etc. Specified items of property, real property, etc. A specific devise, is a gift in a will to a specific person other than an amount of money. For example, if Jamess will states that he is leaving his $500,000 yacht to his brother Mike, a general devise, is a monetary gift to a specific person to be satisfied out of the overall estate. For example, if Jamess will states that he is leaving $500,000 to his son Sam then the money would be a general devise, a demonstrative devise, is money given from a particular account. For example, $10,000 to be paid from the sale of my GM stock, a residual devise is one left to a devisee after all specific and general devices have been made. For example, Jamess will might say, I give all the rest, residue, Lilly would be the residual devisee and entitled to Jamess residuary estate
22.
Acts of independent significance
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The doctrine is frequently applied under the following two circumstances, The testator devises assets to a class of beneficiaries where the testator controls membership. For example, Joey leaves the contents of his account to my employees. If Joey then fires some of old employees and hires new ones, the testator devises a general type of property, and then changes the specific items of property within that category. For example, Joey writes in his will, I leave my car to Rachel, Joey drives a 1974 AMC Gremlin at the time of the testamentary instrument, but later sells the Gremlin and purchases a 2009 Rolls-Royce Phantom Drophead Coupé with suicide doors and teak paneling. Because Joey bought a new car to get a comfortable ride, rather than to change a will without going through the testamentary formalities. The execution or revocation of another individuals will is such an event
23.
Elective share
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It may also be called a widows share, statutory share, election against the will, or forced share. Currently, the amount to be reserved for a spouse is determined by the law of the state where the estate is located, some states also reduce the elective share if the surviving spouse is independently wealthy. In some jurisdictions, if the claims the elective share, they get that amount. In other states, claiming an elective share has no effect on gifts under a will or through a trust, obviously, there would be no point in seeking an elective share if the surviving spouse has already been willed more than they would receive under the statute. Some states also permit children of the deceased to claim an elective share, the elective share is usually calculated from assets beyond those in the probate estate alone, and the assets that are added together to make this calculation are called an augmented estate. Second, it prevents the surviving spouse from taking too large an elective share, the Florida homestead property of the decedent, whether owned by the decedent solely or also with the surviving spouse, is excluded from the elective share calculation
24.
Pretermitted heir
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The most common category of pretermitted heir is the pretermitted child, born after the execution of the will. Many jurisdictions have enacted statutes that permit a child to demand an inheritance under the will. This may be accomplished by reducing the gift under the will to the other children. Some jurisdictions provide the rights for a child who was pretermitted because, although born before the will was executed. This may be because the child was believed to be dead. A will may contain a clause, however, which explicitly disinherits any heirs unknown at the time that the will is executed, another party for whom the state might provide is the pretermitted spouse, whom the testator does not marry until after the execution of the will. Many jurisdictions provide that a spouse will receive either her intestate share. A pretermitted spouse may also disclaim any interest in the estate through an antenuptial or prenuptial agreement
25.
Express trust
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An express trust is a trust created in express terms, and usually in writing, as distinguished from one inferred by the law from the conduct or dealings of the parties. Property is transferred by a person to a transferee, who holds the property for the benefit of one or more persons, the trustee may distribute the property, or the income from that property, to the beneficiaries. Express trusts are used in common law jurisdictions as methods of wealth preservation or enhancement. Law generally requires only a formality to create an express trust. In certain jurisdictions, an express trust may even be established orally, typically, a settlor would record the disposition, where real property is to be held in trust or the value of property in trust is large. Where legal title to property is being passed to a trustee, where property is to continue to be held by the person making the trust, a declaration of trust will be appropriate. Often, a trust corporation or more than one trustee is appointed to allow for uninterrupted administration of the trust in the event of a resignation, death. Additionally a Protector may be appointed who, for example, is authorized to appoint new trustees, to be valid in equity, a trust must satisfy the following elements,1. Property or rights of a kind which can be the subject of a trust 2, a declaration of trust or disposition on trust by a person legally competent to create a trust 3. Certainty of property and objects (trust must be administratively workable 4, compliance with requirements regarding evidence 5. Compliance with rule against remoteness of vesting Bare trust property transferred to another to hold e. g. for a person absolutely. May be of use where property is to be held and invested on behalf of a child or mentally incapacitated person. Life Interest trust the income from property transferred is paid to one person the life tenant during their lifetime and thereafter is transferred to another person. The trustees may have power to pay capital as well as income to the life tenant, Discretionary trust the trustees may pay out income to whichever of the beneficiaries they, in the reasonable exercise of their discretion, think fit. They will normally also have a power to pay out capital and they may have extensive powers, even to add new beneficiaries, but such powers may normally only be exercised bona fide in the interests of the beneficiaries as a whole. Discretionary trusts must not be indefinite and are subject to the rule against perpetuities, in New South Wales, the time prescribed is a statutory period of 80 years from the date the disposition takes effect. Charitable trusts this is also a form of discretionary trust, trusts for a purpose are generally invalid at common law however charities are an exception, protective trusts and Spendthrift trusts can be established to provide an income for persons who cannot be trusted with it. g. The court does not have the power to consent to the variation of a trust on behalf of an individual who is sui juris
26.
Resulting trust
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The trust property is said to result back to the transferor. In this instance, the result means in the result, remains with. Not all trusts whose beneficiary is also the settlor can be called resulting trusts, the beneficial interest results in the settlor, or if the settlor has died the property forms part of the settlors estate. It remains with the person and Re Vandervell case has proven that only the Beneficial interest disappears, some jurisdictions may establish a rebuttable presumption of gift for property transfers between relatives. The presumption may operate as a defense to a petition to establish a resulting trust implied by operation of law. The law presumes that it is legitimate to transfer property to a family member, but an unrelated transferee who receives substantial value without consideration is ordinarily presumed to hold the property in trust for benefit of the transferor. The rebuttable presumption of gift affects transfers between siblings, uncles, aunts, children, and grandchildren, a notable exception to the presumption of gift is the transfer of property between husband and wife. The marital exception to presumption of gift arises from the duty that spouses owe to one another. Spouses have a trusted relationship that imputes an obligation of utmost good faith. In a common law system, a resulting trust law is a creation of the law of equity rather than of common law, accordingly, the laws of some jurisdictions might recognize equitable defenses such as laches, unclean hands, and the responsibility to do equity. Where a transferor has transferred property for a purpose, and gained the benefit. In such situations, a court balances the transferees unjust enrichment with the enablement of cheating by the transferor, enabling a cheater to gain from his transaction would erode the legitimacy of the court. Other jurisdictions may elect to disregard an unlawful purpose, in situations involving illegality, it can become difficult to distinguish implementation of a resulting trust theory from an oral express trust. A transferor failing upon one theory might still prevail upon the other, classification One attempt to classify resulting trusts was made by Megarry J in Re Vandervells Trusts Ch 269. According to Megarry J there are two sorts of resulting trusts in English law, some have argued that this presumption arises as a result of a lack of intention to transfer any beneficial interest. This view has not received judicial endorsement. The settlor intends to retain the beneficial interest in the property, the trust is implied by the settlors lack of intention to transfer any beneficial interest Although in many cases the outcome would be the same, the difference is significant. It is often difficult to prove intention, but easier to prove the circumstances when a legal presumption will arise and it may be more or less easy to rebut a presumption than to disprove an intention
27.
Constructive trust
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In a constructive trust the defendant breaches a duty owed to the plaintiff. The most common such breach is a breach of fiduciary duty, a controversial example is the case of Attorney-General for Hong Kong v Reid, in which a senior prosecutor took bribes not to prosecute certain offenders. With the bribe money, he purchased property in New Zealand and his employer, the Attorney-General, sought a declaration that the property was held on constructive trust for it, on the basis of breach of fiduciary duty. The Privy Council awarded a constructive trust, the case is different from Regal Ltd v Gulliver, because there was no interference with a profit-making opportunity that properly belonged to the prosecutor. In the event of the insolvency, the trust assets are untouchable by the general creditors. Supporters of Lister suggested that there was no reason to put the victim of wrongdoing ahead of other creditors of the estate. There was a tension in English law between Lister and Reid which was highlighted in Sinclair Investments Ltd v Versailles Trade Finance Ltd, the United Kingdom Supreme Court subsequently overruled Sinclair in FHR European Ventures LLP v Cedar Capital Partners LLC, holding that Lister was no longer good law. In Foskett v McKeown a trustee used trust money together with some of his own money to purchase an insurance policy. The insurance company out to his family. The defrauded beneficiaries of the trust sought a declaration that the proceeds were held on constructive trust for them, there is controversy as to what the true basis is of this trust. The House of Lords said that it was to vindicate the plaintiffs original proprietary rights, however, this reasoning has been criticized as tautologous by some scholars who suggest the better basis is unjust enrichment. In Foskett v McKeown, the original property was an interest in the trust fund. The remedy they obtained was a constructive trust over an insurance payout and it is not obvious why such a new right should be awarded without saying it is to reverse the familys unjust enrichment. In Chase Manhattan Bank NA v Israel-British Bank Ltd one bank paid another bank a sum of money by mistake. Goulding J held that the money was held on trust for the first bank and this remains an area of intense controversy. These type of trusts are called institutional constructive trusts and they arise the moment the relevant conduct occurs. They can be contrasted with remedial constructive trusts, which arise on the date of judgment as a remedy awarded by the court to do justice in the particular case, an example is the Australian case Muschinski v Dodds. A de facto couple lived in a owned by the man
28.
Bare trust
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A bare trust is a trust in which the beneficiary has a right to both income and capital and may call for both to be remitted into his own name. A simple trust requires that any income it receives be distributed within the tax period it is earned. This is opposite to a complex trust where the funds are not required to be paid out right away, new section 67A & 67B provides that a fund can borrow money if,1. The borrowed monies are used to acquire an asset which the fund is not otherwise prohibited from acquiring 2, the asset acquired is held on trust so the fund receives a beneficial interest in the asset 3. The SMSF has the right to legal ownership of the asset by making one or more payments after acquiring the beneficial interest 4. Any recourse the lender has under the arrangement against the SMSF trustee is limited to rights relating to the asset acquired, the Bare Trust Deed Trust Deed is a key document. Care is required to ensure there are no adverse GST, taxation or stamp duty consequences and this case is an important reminder to practitioners of some of the difficulties that can arise where an insolvent company owns property as a corporate trustee. Care should be taken to review the trust deed on appointment to ensure the trustee retains its powers to sell trust assets
29.
Interest in possession trust
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An interest in possession trust is a form of legal arrangement which gives a person a present right to the present enjoyment of something. The beneficiary with the right to enjoy the trust property for the time being is said to have an interest in possession and is described as an income beneficiary. A trust can give the interest in possession to a beneficiary for a period, for an indefinite period or, more usually. Such a life interest trust is the most common example of an interest in possession trust, in the United Kingdom, the 10-yearly Inheritance Tax charge may be due on assets transferred into this type of trust on or after 22 March 2006. In the example of a life interest trust, the interest in possession ends when the beneficiary, also called the life tenant. The capital of the trust will then pass to another beneficiary, either the will or trust deed establishing the trust, or the general law, will set out how tax and trustees expenses will be divided between the income beneficiary and the capital of the trust. Trustee investment policies will also allow emphasis on either present income or capital growth or a balance, interest in possession trusts are often created as part of a will. Typically, a spouse will be granted a right to the income of the trust by the settlor. When the surviving spouse dies, the rest of the fund may pass to the children or other named persons. The Duchy of Cornwall is the owner of 0. 20% of land in the United Kingdom. When there is a Duke or Duchess of Cornwall, he or she has an interest in possession in the duchys assets, when there is no such lifetime owner the interest in possession reverts to the pre-1337 owner, the Crown. It is then under its statutory and quasi-statutory terms vested on the future Duke or Duchess of Cornwall which mean it is not subject to the rule against perpetuities
30.
Charitable trust
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A charitable trust is an irrevocable trust established for charitable purposes and, in some jurisdictions, a more specific term than charitable organization. In the Islamic Republic of Iran religious charitable trusts, or Bonyads, make up a part of the countrys economy. Unlike some other Muslim-majority countries, the bonyads receive large and controversial subsidies from the Iranian government, in England and Wales, charitable trusts are a form of express trust dedicated to charitable goals. There are a variety of advantages to charitable trust status, including exception from most forms of tax, to be a valid charitable trust, the organisation must demonstrate both a charitable purpose and a public benefit. There is also a requirement that the trusts purposes benefit the public, such trusts will be invalid in several circumstances, charitable trusts are not allowed to be run for profit, nor can they have purposes that are not charitable. In addition, it is considered unacceptable for charitable trusts to campaign for political or legal change, charitable trusts, as with other trusts, are administered by trustees, but there is no relationship between the trustees and the beneficiaries. This results in two things, firstly, the trustees of a charitable trust are far freer to act than other trustees and secondly, beneficiaries cannot bring a court case against the trustees. Rather, the beneficiaries are represented by the Attorney General for England and Wales as a parens patriae, jurisdiction over charitable disputes is shared equally between the High Court of Justice and the Charity Commission. The Commission, the first port of call, is tasked with regulating and promoting charitable trusts, as well as providing advice, where there are flaws with a charity, the High Court can administer schemes directing the function of the charity. In the United States, many individuals use charitable trusts to leave all or a portion of their estate to charity when they die, charitable trusts may be set up inter vivos or as a part of a trust or will at death. There are two types of US charitable trusts. The first is a lead trust, wherein the charity is paid first, the second is a remainder trust, wherein the charity is paid last after termination of the trust, after other beneficiaries have received payments. Payments may be fixed amount, annuity trust, or a percentage of principal and these split interest trusts are defined in §664 of the Internal Revenue Code of 1986 as amended and are normally tax-exempt. A section 664 trust makes its payments, either of an amount or a percentage of trust principal. At the end of the trust term, which may be based on either lives or a term of years, parents who have a child with a disability should ensure that the inheritance they leave for their child does not affect their childs eligibility for social assistance programs. A Henson trust can be useful to ensure this, charitable lead trusts make payments, either of a fixed amount or a percentage of trust principal, to charity during its term. At the end of the trust term, the remainder can either go back to the donor or to heirs named by the donor. The donor may sometimes claim a charitable tax deduction or a gift/estate tax deduction for making a lead trust gift
31.
Incentive trust
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In American estate planning parlance, an incentive trust is a trust designed to encourage or discourage certain behaviors by using distributions of trust income or principal as an incentive. A typical incentive trust might encourage a beneficiary to complete a degree, enter a profession, or abstain from harmful conduct such as substance abuse. The beneficiary might be paid an amount of money from the trust upon graduating from college. The seeming popularity of incentive trusts, however, is reflected in the websites created by estate planners to market them. Robert Frank, The Wrong Way to Leave Money to Heirs, The Wealth Report, Wall Street Journal Online, eileen Gallo, A Psychotherapist Looks at Incentive Trusts, Journal of Financial Planning. Tate, Conditional Love, Incentive Trusts and the Inflexibility Problem,41 Real Prop, wells, Marble & Hurst, PLLC, Incentive Trusts, An Idea Whose Time Has Come
32.
Protective trust
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The Protective Trust is a form of settlement found in England and Wales and several Commonwealth countries. It has marked similarities to asset-protection trusts found in offshore jurisdictions. In such a trust assets are held to pay an income to the beneficiary. The beneficiary may also have access to capital of the trust with the trustees permission, additionally on a bankruptcy the right to the income would be sold by the beneficiarys trustee in bankruptcy. The establishment of discretionary trust is ordinarily exempt from the charge to UK inheritance tax on the establishment of discretionary trusts. Such protective trusts have a longstanding history, Protective trusts are subject to challenge under creditor protection legislation as are any other forms of asset-protection
33.
Spendthrift trust
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Creditors of the beneficiary generally cannot reach the funds in the trust, and the funds are not actually under the control of the beneficiary. The creator of a trust is called the trustor, grantor, or settlor of the trust. A trust generally will not be treated as a spendthrift trust unless the trust agreement contains language showing that the creator intended the trust to qualify as spendthrift and this is what is known as a spendthrift clause or spendthrift provision. A spendthrift provision creates an irrevocable trust preventing creditors from attaching the interest of the beneficiary in the trust before that interest is actually distributed to him or her, most well drafted irrevocable trusts contain spendthrift provisions even though the beneficiaries are not known to be spendthrifts. This is because such a provision protects the trust and the beneficiary in the event a beneficiary is sued, the protection of the spendthrift trust extends solely to the property that is in the trust. Once the property has been distributed to the beneficiary that property can be reached by a creditor, some creditors may compel payment out of the trust, particularly those who supply the beneficiary with necessaries. Most jurisdictions also permit the invasion of spendthrift trust assets to satisfy awards of child support, a trust created by an individual for his or her own benefit is sometimes called a self-settled trust, and may be a kind of asset-protection trust. The settlor does not need to be either the sole settlor or the beneficiary of the trust. As long as the settlor is a beneficiary of the trust to any extent, to that extent the trust will be deemed self-settled. Further, laws in states are worded so broadly that anyone transferring property to the trust might be deemed to be a creator. However, several states have changed their laws to provide that a person may create a self-settled spendthrift trust, such trusts are also called Domestic Asset Protection Trusts, and sometimes informally called Alaska trusts, as Alaska was a pioneer in allowing this kind of spendthrift trust. However, because of the danger of the misuse of Alaska trusts to defraud creditors, Nevada has enacted a series of statutes, codified at Chapter 166 of the Nevada Revised Statutes, that specifically enable the creation of self-settled spendthrift trusts. This form of trust is commonly referred to as a Nevada Asset Protection Trust, under Chapter 166, an individual can serve as the settlor, trustee and beneficiary of the trust. This network of laws is specifically designed to protect trust assets from the claims of any creditor, NRS166.170 specifically limits the circumstances under which a creditor may bring a claim. If the creditors claim surfaces after the transfer is made, the creditor must bring its claim within two years after the transfer, regardless of notice. Moreover, the creditor can only sustain its claim if it can prove by clear and it is unclear the extent to which sister states will recognize the asset protections of these DAPTs, like those created under the laws of Nevada and Alaska. Relevant case law is somewhat sparse, some of these DAPT laws can be quite expansive. The scope of the Nevada law is drawn quite broadly to govern Nevadas enforcement of all trusts created within or outside the state, so long as they meet certain limited criteria
34.
Life insurance trust
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A life insurance trust is an irrevocable, non-amendable trust which is both the owner and beneficiary of one or more life insurance policies. Upon the death of the insured, the trustee invests the insurance proceeds, if the trust owns insurance on the life of a married person, the non-insured spouse and children are often beneficiaries of the insurance trust. If the trust owns second to die or survivorship insurance which pays when both spouses are deceased, only the children would be beneficiaries of the insurance trust. In the United States, proper ownership of insurance is important if the insurance proceeds are to escape federal estate taxation. If the policy is owned by the insured, the proceeds will be subject to estate tax, to avoid estate taxation, some insureds name a child, spouse or other beneficiary as the owner of the policy. There are drawbacks to having insurance proceeds paid outright to a child, spouse, doing so may be inconsistent with the insureds wishes or the best interests of the beneficiary, who might be a minor or lacking in financial sophistication and unable to invest the proceeds wisely. The insurance proceeds will be included in the taxable estate at his or her subsequent death. If the proceeds are used to pay the estate taxes. However, using insurance proceeds to pay the estate taxes effectively increases the beneficiarys estate since the beneficiary will not have to sell inherited assets to pay such taxes. The solution to both drawbacks is usually a life insurance trust. If possible, the trustee of the insurance trust should be the original applicant, if the insured dies within this three-year period, the transfer will be ignored and the proceeds will be included in the insureds taxable estate. Insurance trusts may be funded or nonfunded, a funded life insurance trust owns both one or more insurance contracts and income producing assets. The income from the assets is used to pay some or all of the premiums, unfunded insurance trusts own one or more insurance policies and are funded by annual gifts from the grantor. Customarily, the trustee of the insurance trust is authorized, but not required, to either purchase assets from the insureds estate or loan insurance proceeds to his or her estate
35.
Asset-protection trust
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An asset-protection trust is a term which covers a wide spectrum of legal structures. Any form of trust which provides for funds to be held on a discretionary basis falls within the category, such trusts are set up in an attempt to avoid or mitigate the effects of taxation, divorce and bankruptcy on the beneficiary. Such trusts are therefore frequently proscribed or limited in their effects by governments, Trusts were developed at common law in England originally to minimize the impact of inheritance taxes arising from transfers at death. The essence of the trust was to separate legal title, which was given to someone to hold as trustee, from equitable title, which was to be retained by the trust beneficiaries. In the United States and England, a practice developed whereby trust settlors began to use spendthrift clauses to prevent trust beneficiaries from alienating their beneficial interests to creditors. A case law doctrine developed whereby courts may recognize the efficacy of spendthrift clauses as against trust beneficiaries and their creditors. The asset-protection trust is a trust that splits the beneficial enjoyment of trust assets from their legal ownership, the beneficiaries of a trust are the beneficial owners of equitable interests in the trust assets, but they do not hold legal title to the assets. Thus this kind of trust fulfills the goal of asset protection planning, a creditor’s ability to satisfy a judgment against a beneficiary’s interest in a trust is limited to the beneficiary’s interest in such trust. Consequently, the goal of asset protection trusts is to limit the interests of beneficiaries in such a way so as to preclude creditors from collecting against trust assets. Most of them contain a clause preventing a trust beneficiary from alienating his or her expected interest in favor of a creditor. The first general exception, which accounts for the majority of asset protection trusts, the laws of certain jurisdictions including Alaska, Bermuda, and the Cayman Islands allow self-settled trusts to afford their settlors the protection of the spendthrift clause. Alaska was the first US jurisdiction to enact laws allowing protection for self-settled trusts and was followed by Delaware, Nevada, South Dakota. These trusts are known as Domestic Asset Protection Trusts, Trusts are generally governed by the laws of the jurisdiction that is designated by the settlor as the governing jurisdiction. Additionally, the Full Faith and Credit clause of the Constitution provides that state must give full faith. These jurisdictions are also known as United States Asset Protection Trusts, the context of a non-US settlor has a few advantages over that of a US settlor. The issue of the Full Faith and Credit clause doctrine of the US Constitution would not apply to a non-US settlor facing a non-US judgment. South Dakota was one of the first states to allow a trust to endure perpetually, essentially jumping outside the federal transfer tax system theoretically forever. Currently, twenty-four other states have joined the ranks of offering a long-term trust, nineteen of these states, including South Dakota, allow a trust to continue in perpetuity
36.
Special needs trust
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A special needs trust is a trust designed for beneficiaries with disabilities, either physically or mentally challenged. Special needs trusts are known as supplemental needs trusts in the United States. A trust for a beneficiary with disability may be set up in any of the common law countries, including the United States, and also in other countries that recognize the concept of a trust. In such jurisdictions, there is legislation that provides advantages to such trusts in the areas of taxation and state benefits, e. g. in Ireland. Special needs trusts can provide benefits to, and protect the assets of, a common feature of trusts in all common law jurisdictions is that they may be run either by family members or by trustees appointed by the court. However where no appropriate trustees can be found, e. g. on the death of existing trustees, the court will intervene. Special needs trusts are set up under the guidance of a structured settlement planner in cooperation with a qualified legal and financial team to ensure the trust is set up correctly. Only authorized non-profit organizations are approved to manage a special needs trust program, such pooled trusts are available throughout the United States and are often centered on certain purposes. Protect your government benefits with a special needs trust published by the National Structured Settlements Trade Association,2011
37.
Pour-over will
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More recently, however, a number of jurisdictions have recognized the validity of a pour-over will. In the jurisdictions in the U. S, the testators property is subject to probate until such time as the pour-over clause is applied, and the estate assets pour into the trust. The trust instrument must be either in existence at the time when the will with the clause is executed. However, the trust need not be funded inter vivos, the pour-over clause protects property not previously placed in a trust by pouring it into the previously established trust through the vehicle of the will
38.
Hague Trust Convention
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It concluded on 1 July 1985, entered into force 1 January 1992, and is as of March 2011 ratified by 12 countries. The Convention aims to not only the municipal law definitions of a trust. The key provisions of the Convention are, each recognises the existence. However, the Convention only relates to trusts with a written trust instrument and it would not apply trusts which arise without a written trust instrument. The Convention sets out the characteristics of a trust the Convention sets out rules for determining the governing law of trusts with a cross border element. Many states do not have a law of trusts, or the principles differ significantly between states. The definition offered in Article 2 is, the reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust. Article 3 provides that the Convention only applies to trusts created voluntarily. It will therefore not cover oral trusts, resulting trusts, constructive trusts, obviously, if the will purporting to create the trust is held invalid, there are no trusts to adjudicate upon. Article 6 allows the settlor to select the applicable law in the inter vivos or testamentary document, under normal circumstances, the settlor will be acting on professional advice and will make an express selection or it will be implied from the facts of the case. Despite the identification of four factors, the court must actually perform a rounded evaluation of all the circumstances. Under Article 8, the law specified by Article 6 or 7 shall govern the validity of the trust, its construction, its effects, in fact, the settlor may expressly select an Applicable Law for each component and the forum court should respect his or her wishes. The relevant lex situs can be applied to micromanage the asset by the trustee without having to apply the law to the administration of the trust in that state. Equally, this is not an argument for an approach which favours the law of the place of administration as the Applicable Law. However, the rights and obligations of any third party holder of the assets shall remain subject to the law determined by the choice of law rules of the lex fori and this implicitly recognises the desirability of all registration systems distinguishing between beneficial and representative titles
39.
Dishonest assistance
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Dishonest assistance, or knowing assistance, is a type of third party liability under English trust law. It is usually seen as one of two liabilities established in Barnes v Addy, the one being knowing receipt. The liability itself is established, but the mental element of dishonesty is subject to considerable controversy which sprang from the House of Lords case Twinsectra Ltd v Yardley. As can be seen, the judgment laid down two heads of liability, one based on receipt of trust property and the other on assisting with knowledge in a dishonest and fraudulent design. Lord Selbournes statement has been criticized, particularly on the requirement that the defaulting fiduciary / trustee has to be dishonest or fraudulent. Another debate was regarding the type of knowledge that would suffice to impose liability, peter Gibson J in Baden v Société Générale identified 5 categories of knowledge which was subject to much debate and led the courts into tortuous convolutions. The prevalent view is that liability for dishonest assistance is secondary, therefore, the liability of the assistant is premised on that of the defaulting fiduciary / trustee and he/she will be jointly and severally liable with the fiduciary / trustee whom he/she assisted. There are also views that liability for dishonest assistance should be primary, however, such views have yet to receive judicial endorsement. Dishonest assistants have been described by courts as constructive trustees. Some commentators have sought to explain this on the basis that there is a type of constructive trust which can even if there is no identifiable trust property. However, the prevalent view is that dishonest assistance is a liability that does not result in an imposition of constructive trust. This view has the support of Lord Millett who remarked in Dubai Aluminium Co v Salaam and it is sufficient if the trust in question is a resulting trust or constructive trust. However, the requirement of dishonest or fraudulent design on the part of the defaulting fiduciary / trustee is still part of the law in Australia and this element is a question of fact as to whether the defendant has been accessory to the misfeasance or breach of trust in question. Historically in England, liability would be imposed on persons who assisted in a breach of trust or fiduciary duty with knowledge, hence its previous name of knowing assistance. It should be noted that knowledge is still the cornerstone of the liability in Australia, the modern English terminology emerged in Royal Brunei Airlines v Tan in which the Privy Council rejected knowledge as an element of the liability and replaced it with a requirement for dishonesty. When undertaking such exercise, the court also have regard to personal attributes of the defendant, such as his experience and intelligence. The issue was reconsidered in Twinsectra Ltd v Yardley in the House of Lords. This became known as the combined test, namely a standard which requires both subjective and objective states of mind
