Today’s class

1. Today’s class Pour-over wills Joint tenancies in realty as our final example of a nonprobate way to transfer property Spouses holding a joint tenancy in their home Planning for incapacity Revocable trusts (pp. 439-440) Durable powers of attorney Advance directives for medical care Disposition of the body

2. Follow up On Monday, we had a practice question involving standing to challenge a will, and we saw that heirs apparent under the rules of intestacy have standing Who else has standing? Interested persons—people who are beneficiaries under the will and people who were intended beneficiaries under a prior will and would receive less under the contested will What about a family member or friend who was victimized by the undue influence of a caretaker but doesn’t qualify as an heir apparent or beneficiary under a will? Tortious interference with an expectancy (pp. 215-220)

3. Pour-over wills and revocable trusts in modern estate planning • The combination of a pour-over will and trust allows people to avoid probate and to consolidate all of their property into one instrument. • Avoiding probate—can’t avoid taxes, but can reduce other costs • Privacy—both from strangers and disappointed heirs • Choice of law—can select which state’s law applies (which also is allowed under UPC § 2-703) • Reduce delay–bequests can be disbursed more quickly • Amending estate plan—just amend the trust provisions • Blended family—greater control over disposition of estate with surviving spouse and children from a prior marriage

4. Pour-over wills and revocable trusts in modern estate planning • There are some disadvantages • Creditors may have a longer statute of limitations period for filing claims against a trust than against a probate estate • Legal fees for a pour-over will and trust may be greater than for just a will • Less certainty about the application of the subsidiary law of wills (but most of the issues can be addressed by a well-drafted trust)

5. Pour-over wills, revocable trusts, and nonprobate transfers Donor Residuary Beneficiary: Trustee of T’s Revocable Trust Beneficiary: Trustee of T’s Revocable Trust Transfer of Assets Nonprobate Transfers Revocable Trust Pour-Over Will

6. Model pour-over provision • “I give my residuary estate, which shall not include any property over which I have power of appointment, to the trustee of that certain trust already created by me and known as the JOHN DOE 20___ DECLARATION OF TRUST, as in effect at my death, of which I now am trustee and of which my spouse now is named as successor trustee.”

7. UPC §2-511:Testamentary Additions to Trusts, p.444 (a) A will may validly devise property to the trustee of a trust established or to be established … during the testator’s lifetime by the testator… or … at the testator’s death by the testator’s devise to the trustee, if the trust is identified in the testator’s will and its terms are set forth in a written instrument, other than a will, executed before, concurrently with, or after the execution of the testator’s will ... . The devise is not invalid because the trust is amendable or revocable, or because the trust was amended after the execution of the will or the testator’s death.

8. What were the facts in Clymer v. Mayo?, p.445 • In her second will, Clara Mayo executed a pour-over will and revocable trust • Her husband was the life beneficiary of the trust, with remainder interests to her nephews and nieces and then to Boston University and Clark University • Clara designated the trust as the beneficiary of her life insurance policy and retirement plan • Clara divorced her husband and made a close friend the beneficiary of her life insurance policy but did not change the retirement plan beneficiary or the terms of the trust • Thus, her ex-husband remained the principal beneficiary of her retirement plan

9. Clymer v. Mayo Clymer v. Mayop.445 Maria Joseph James Life Insurance Marianne Trust Niece and Nephews and Life Insurance Clara

10. What result in Clymer? • Under Massachusetts law, the interest of a spouse in a will is revoked upon divorce from the testator • Even though there was no similar statutory provision for trusts, the court applied the principle of revocation • The “will and trust were integrally related components of a single testamentary scheme” (second ¶ of opinion excerpt, p. 446) • Same result under UPC § 2-804 and Ind. Code § 30-4-2-15

11. Clymer and retirement plans • Why did this case come out differently from Egelhoff, where ERISA prevented the revocation of the divorced spouse’s beneficiary status? • In this case, the retirement plan assets followed the beneficiary designation, which was the trust. It was the trust beneficiary designation that was revoked, not the retirement plan beneficiary designation.

12. Joint tenancies in land The joint tenants have equal interests; most important actions require the agreement of all tenants Not unilaterally revocable, so an imperfect will substitute (though Brousseau, p. 448, suggests some exceptions) Joint tenants cannot devise their shares in a will. Upon death, the decedent’s share vanishes and is taken by the other joint tenant(s). To pass by will, the joint tenants must sever the joint tenancy and convert it into a tenancy in common. Creditors can reach a joint tenant’s interest only during the tenant’s lifetime.

13. Durable powers of attorneypp. 448-449 Powers of attorney terminate upon principal’s incapacity; durable powers of attorney survive the principal’s incapacity (though not the principal’s death) Trustees versus agents under durable powers Trustees can retain powers after settlor’s death Courts will appoint successor trustees if trustee dies; only principal can provide for successor agents Trustees enjoy broad powers to conduct transactions with the trust property; agents tend to be much more limited (though principal can grant broad powers) Third parties more comfortable dealing with trustees

14. What were the facts in Kurrelmeyer?, p. 449 Once again, we have children from a first marriage pitted against the wife from a second marriage Kurrelmeyer appointed one of his children and his wife as agents under durable powers of attorney After Kurrelmeyer lost capacity, his wife created a trust for him, with herself and child as co-trustees, and transferred the Clearwater property into the trust Under the trust, the wife had greater rights to the Clearwater property than she would have received per Kurrelmeyer’s will, and the children had lesser rights

15. In re Estate of Kurrelmeyer In re Estate of KurrelmeyerSupreme Court of Vermont Life Estate in Clearwater Martina First Wife Louis Clearwater in Trust Remainder in Clearwater Nancy Louis, Jr. Ellen

16. Did the wife have authority to create a trust? Under traditional agency law, any powers of an agent have to be expressly stated, with terms of appointment construed strictly This court took a more flexible approach, based on the intent of the principal Note the trade-off between ability to benefit the principal and the potential for abuse Courts can err on the side of protecting against abuse by construing the powers very strictly, or they can err on the side of benefiting the principal by construing powers more flexibly, and rely on agent liability to protect against abuse

17. Did the wife have authority to create a trust? Which provisions of the power of attorney suggested the wife could create a trust? “In addition, I authorize my said attorney to: (1) execute and deliver any . . . trust instruments” (p.451) The agent also was authorized “to add all of my assets deemed appropriate by my said attorney. . . to any trust of which I am the Donor” (p.451) What suggests the wife could not create this particular trust? The power of attorney authorized the making of gifts “to members of my family (other than himself or herself)” (p.452) Did Kurrelmeyer really contemplate his wife revising his will?

18. Could Kurrelmeyer delegate the power to create a trust? Trusts serve important purposes in estate planning and asset management, and there are not countervailing considerations that would justify a prohibition on delegation of the trust-creation power, as with the power to execute a will (p. 453) But if agents can’t execute wills, how can they use trusts to rewrite wills? The court observed that Kurrelmeyer could and did delegate the power to “convey any real estate . . . which I may own”

19. Could Kurrelmeyer delegate the power to create a trust? A better way to explain why agents can rewrite wills through their trust-creating power: The prohibition on agents writing or amending a will is rooted in longstanding statutory interpretation that would need legislative revision. But it is not rooted in a powerful public policy against surrogate decisions. Indeed, there will be many cases in which changes in circumstance make a change in estate planning desirable after the principal loses decision-making capacity.

20. Did the wife breach her fiduciary duties as agent? By conveying the Clearwater property to the trust, she gained greater property rights The power of attorney prohibited her from making gifts to herself Fiduciary principles prohibit agents from using their authority for their own benefit except as authorized On the other hand, the wife argued that the conveyance was justified by prudent tax and estate planning objectives In addition, the approval of the co-trustee provided a safeguard against abuse Case remanded for further proceedings on this question

21. What happened on remand? As note 1 indicates, p. 454, the trial court found that the trust carried out Kurrelmeyer’sintentions, which he had discussed with an estate planning attorney He hadn’t executed his intentions because he wasn’t sure whom to name as his wife’s co-trustee, and he lost his decision-making capacity before resolving the question (too much deliberation can defeat an estate plan) In the trial court’s view, the wife was simply carrying out Kurrelmeyer’s intent (which was to give her the freedom to move out of the Clearwater property) The Vermont Supreme Court upheld the trial court’s holding (992 A.2d 316 (Vt. 2010))

22. Advance directives for health care Treatment directives (i.e., living wills) Specifies treatment in the event of incompetence, usually for life-sustaining treatment decisions. Proxy appointments Designates an agent to make health care decisions for the patient. Hybrid or combined documents Incorporates both of the first two approaches, that is, directs treatment preferences and designates an agent to make substituted decisions. Important to make sure that people share preferences about organ donation with family

23. End-of-life decisions • Patient has the right to accept or refuse medical treatment (federal constitutional right, plus state constitutional right and/or state common law right) • Even if the treatment is life-sustaining • Includes all treatments, whether ventilator, dialysis, antibiotics, or artificial nutrition and hydration • Regardless of patient’s diagnosis and prognosis • Survives a patient’s loss of mental capacity

24. Substitute decisionmaking • Look to prior instructions from patient (e.g., advance directive, oral statements, pattern of practice, religious or other moral views) • Follow prior instructions if they give “clear and convincing” evidence of the patient’s preferences • Either preferences with regard to treatment or with regard to surrogate decision maker • Note the absence of formalities that we’ve seen with preferences about the distribution of one’s estate

25. Substitute decisionmaking • Evidence of the patient’s wishes is clear and convincing when it is “sufficient to persuade the trier of fact that the patient had a firm and settled commitment” to decline treatment. O’Connor, 531 N.E.2d 607, 613 (N.Y. 1988).

26. Clear and convincing evidence • Some states look only at specific evidence • Other states (including IN) look at full range of evidence. • Some states find that patient’s prior statements amount to clear and convincing evidence while other states would find the same evidence to be insufficient.

27. Clear and convincing evidence absent • Provide treatment (NY before 2010) • Defer to the family’s wishes (IN, MA, VA) • Decide on basis of patient’s best interests (AZ, MN) • Vary the standard depending on the patient’s prognosis (CA, MI, NJ, NY, PA, WI) • These “default” rules are the medical treatment analogues for intestacy rules • Implemented by court decision or statute

28. Indiana’s living will statute • The attending physician shall . . . certify . . . that a person is a qualified patient if . . . • The attending physician has diagnosed the patient as having a terminal condition. . . . • Ind. Stat. Ann. § 16-36-4-13

29. Indiana’s living will statute • “Terminal condition” means a condition . . . from which . . . • there can be no recovery; and • death will occur from the terminal condition within a short period of time without the provision of life prolonging procedures. • Ind. Stat. Ann. § 16-36-4-5

30. Indiana’s living will statute • The living will declaration of a person diagnosed as pregnant by the attending physician has no effect during the person’s pregnancy. • Ind. Stat. Ann. § 16-36-4-8(d)

31. Indiana’s living will declaration • If at any time my attending physician certifies . . . that • (1) I have an incurable . . . illness, • (2) my death will occur within a short time; and • (3) the use of life prolonging procedures would serve only to prolong the dying process, • I direct that such procedures be withheld or withdrawn . . . . • Ind. Stat. Ann. § 16-36-4-10

32. Indiana’s living will declaration • ____I wish to receive artificially supplied nutrition and hydration, even if the effort to sustain life is futile and excessively burdensome to me. • ____I do not wish to receive artificially supplied nutrition and hydration, if the effort to sustain life is futile or excessively burdensome to me. • ____I [leave] the decision [about artificially supplied nutrition and hydration to my health care proxy]. • Ind. Stat. Ann. § 16-36-4-10

33. Indiana’s living will statute • A declaration must be substantially in the form set forth in either [the living will declaration or the life prolonging procedures declaration], but the declaration may include additional, specific directions. • The invalidity of any additional, specific directions does not affect the validity of the declaration. • Ind. Stat. Ann. § 16-36-4-9

34. Indiana’s living will statute • This chapter does not impair or supersede any legal right or legal responsibility that any person may have to effect the withholding or withdrawal of life prolonging procedures in any lawful manner. • Ind. Stat. Ann. § 16-36-4-17(e).

35. Indiana’s life prolonging procedures declaration • [I]f at any time I have an incurable . . . illness determined to be a terminal condition I request the use of life prolonging procedures that would extend my life. • This includes appropriate nutrition and hydration. . . . • Ind. Stat. Ann. § 16-36-4-11

36. Indiana’s living will statute • A living will declaration . . . shall be given great weight by the physician in determining the intent of the patient. . . . • Ind. Stat. Ann. § 16-36-4-8(f) • A life prolonging procedures will declaration . . . does require the physician to use life prolonging procedures as requested. • Ind. Stat. Ann. § 16-36-4-8(g)

37. Indiana’s living will statute • An attending physician who refuses to use, withhold, or withdraw life prolonging procedures from a qualified patient shall transfer the qualified patient to another physician who will honor the patient’s living will declaration . . . • Ind. Stat. Ann. §16-36-4-13(e)

38. Indiana’s living will statute • If the attending physician, after reasonable investigation, finds no other physician willing to honor the patient’s declaration, the attending physician may refuse to withhold or withdraw life prolonging procedures. • Ind. Stat. Ann. § 16-36-4-13(f)

39. Indiana’s power-of-attorney statute • [An attorney in fact who] has the authority to consent to or refuse health care . . . [may have health care] withdrawn or withheld when it is not beneficial or when any benefit is outweighed by the demands of the treatment . . . . • Ind. Stat. Ann. § 30-5-5-17(a)

40. Indiana’s power-of-attorney statute • To empower the attorney in fact to act, the following language must be included in an appointment under IC 16-36-1 in substantially the same form set forth below: • I authorize my health care representative to make decisions in my best interest concerning withdrawal or withholding of health care. If at any time based on my previously expressed preferences and the diagnosis and prognosis my health care representative is satisfied that certain health care is not or would not be beneficial or that such health care is or would be excessively burdensome, then my health care representative may express my will that such health care be withheld or withdrawn . . . even if death may result. • Ind. Stat. Ann. § 30-5-5-17(a)

41. Indiana’s power-of-attorney statute • My health care representative must try to discuss this decision with me. However, if I am unable to communicate, my health care representative may make such a decision for me, after consultation with my physician or physicians and other relevant health care givers. • To the extent appropriate, my health care representative may also discuss this decision with my family and others to the extent they are available. • Ind. Stat. Ann. § 30-5-5-17(a)

42. Indiana’s Health Care Consent Act • An individual . . . may appoint another individual as a representative to act for the appointor in matters affecting the appointor's health care. • An appointment and any amendment must meet the following conditions: • Be in writing. • Be signed by the appointor or by a designee in the appointor's presence. • Be witnessed by an adult other than the representative. • [Note that living will statute and out-of hospital DNR statute restrict who may serve as a witness.] • Ind. Stat. Ann. §16-36-1-7

43. Indiana’s Health Care Consent Act • The appointor may specify in the appointment appropriate terms and conditions, including an authorization to the representative to delegate the authority to consent to another. • The authority granted becomes effective according to the terms of the appointment. • The appointment does not commence until the appointor becomes incapable of consenting. The authority granted in the appointment is not effective if the appointor regains the capacity to consent. • Ind. Stat. Ann. §16-36-1-7

44. Indiana’s Health Care Consent Act • When a surrogate decision-maker has not been appointed, health care consent may be given by: • a judicially appointed guardian of the person, or if no guardian • a spouse, a parent, an adult child, or an adult sibling, or • the individual's religious superior, if the individual is a member of a religious order • Ind. Stat. Ann. §16-36-1-5

45. Out-of-hospital DNR statute • Applies when the patient has either: • a terminal condition (as defined in the living will statute) or • a medical condition such that, if the person were to suffer cardiac or pulmonary failure, resuscitation would be unsuccessful or within a short period the person would experience repeated cardiac or pulmonary failure resulting in death. • Ind. Code § 16-36-5-10

46. Out-of-hospital DNR statute • Applies to locations other than acute care hospitals • Ind. Code 16-36-5-5 • May be executed by the patient or the patient’s representative • Ind. Code 16-36-5-11 • May be issued only by the patient’s attending physician • Ind. Code 16-36-5-12 • Emergency medical services commission instructed to develop a DNR bracelet or necklace • Ind. Code 16-36-5-17 • The statute does not create a presumption regarding the intent of a person who has not executed an out-of-hospital DNR • Ind. Code 16-36-5-24

47. In re Martin • “Only when the patient’s prior statements clearly illustrate a serious, well thought out, consistent decision to refuse treatment under these exact circumstances, or circumstances highly similar to the current situation, should treatment be refused or withdrawn.” • 538 N.W.2d 399 (Mich. 1995)

48. Alternatives to statutory forms • Medical Directive • ABA health care planning guide • Description of goals of treatment • E.g., I want treatment only if it will allow me to: • Maintain or regain the ability to recognize and communicate with family and friends • Maintain or regain consciousness • Leave the hospital • Important to ensure that the alternative form satisfies the state statutory form’s procedural formalities