When a person (testator) makes a last will and testament, it is customary that the will contain language that the new will revokes any and all prior wills signed by the testator.   The Uniform Probate Code holds that a new will can revoke prior wills even though it contains no other provisions stating that prior wills have been revoked.  If a person signs a new last will which revoked all prior wills, and destroyed all prior wills by burning, cancelling, tearing or obliterating them, then all prior wills would be deemed revoked.  Should a person die and the newly signed will was missing with no copies to be found, then the testator would be deemed to die intestate, or without a will.

On the other hand, if a person dies, and the most recently signed last will and testament is found to be invalid for any reason, such as undue influence, incompetency, or incomplete at the time of the signing of the new will by the testator, then it may be possible to invoke the Doctrine of Dependent Relative Revocation if there are duly signed prior wills that were not destroyed previously by the testator.  This doctrine has been applied when a person revoked a prior will in order to make a new will, but the testator did not complete the new will or the new will was found to be invalid.  If the Court finds that the testator’s intention was to revoke the prior will only if the new will was valid, then the Court may ignore the revocation of the prior will and give effect to that will so that the testator will not die intestate, or without any last will and testament in place.    (more…)

“I’ve got the power!”

Does absolute discretion mean trustees can exercise their discretion absolutely?

The short answer is “no.”  

The longer answer requires the starting point to be – what does the trust say?  The settlor is the person who makes the trust and his or her intent is the polestar by which a trust should be interpreted and construed. 

So if the trust grants the trustee the absolute discretion to distribute money from the trust then isn’t the trust stating that the trustee can do no wrong when deciding what amount to distribute?  Well, not really.  A provision seemingly allowing the trustee to distribute whatever he or she wants to must be balanced with the rest of the document. In other words, a trustee cannot pluck a sentence or two out of a forty page document and rely upon it as his or her absolute authority to distribute all the trust money with impugnity, leaving the remaindermen beneficiaries holding the bag–in many cases an empty one.

The courts have balanced the trustee’s power or discretion to invade the trust principal with the trustee’s fiduciary obligation to the remaindermen beneficiaries. As stated by one court “even an unlimited power of invasion is subject to implied limitations to protect the remaindermen.” So while the trustee may be singing “I’ve got the power,” the second stanza sounds like “but not to the detriment of the final beneficiaries.”

Many people establish trusts through their Last Will and Testament (“testamentary trusts”).  Often establishing trusts is an effective way of ensuring one’s heirs are provided with income while providing checks and balances on the investing and distribution of principal.  At the recent deposition of a financial advisor in a trust dispute, there was testimony that a typical inheritance is usually squandered within eighteen (18) months. (more…)