Lawyers drafting wills and trusts must regularly contemplate age-old issues such as ademption, advancement and lapse, as well as more recent issues such as who is to be considered a “descendant” under the new biology of assisted reproduction. At common law, a number of doctrines were formulated to deal with these recurring issues. The Uniform Probate Code (UPC) likewise addresses these issues through a series of default rules used in the construction of wills, trusts and other dispositive instruments. Some UPC sections adopt common law doctrines; others modify or completely abrogate the common law rules.

To properly draft a dispositive document, you must be familiar with the UPC rules to determine whether they're appropriate for your client's situation and objectives or whether you should prepare a document that elects out of the statutory default rules. If you're a scrivener in a state that hasn't adopted the UPC, you should nevertheless be mindful of the issues the UPC sections address and be familiar with the applicable common law in your state.

A review of the UPC construction rules suggests a number of best practices you should employ when drafting a will, trust or other dispositive document. Here are 10 UPC construction sections and 10 best practices you should incorporate when drafting, regardless of whether you practice in a UPC state.

UPC Overview

The UPC contains 20 sections relating to the construction of wills and other dispositive documents.¹ These sections establish default rules for the interpretation of all types of dispositive documents. Part 6 of the UPC sets forth nine rules applicable only to wills. Part 7 sets forth 11 rules that apply to wills and other types of dispositive documents. All of the rules of construction in Parts 6 and 7 create rebuttable presumptions that may be overcome by a finding of contrary intention on the part of the transferor.

Scope of Part 6

Section 2-601 provides that unless the testator indicated otherwise, the rules of construction in Part 6 control the interpretation of a will. This section makes clear that the testator's will may modify the UPC rules of construction. Accordingly, the draftsman is free to deviate from the default rules set forth in Part 6. Section 2-601 also reflects the common law rule of will construction, which provides that in the search for the testator's intention, reference may be made to both extrinsic evidence and to the language of the will itself.²

Anti-lapse

Section 2-603 is a comprehensive anti-lapse rule. The common law rule of lapse is predicated on the principles that: 1) a will transfers property at the testator's death, not when the will was executed; and 2) property can't be transferred to a deceased individual.³ At common law, a gift to a devisee who predeceases the testator fails — it lapses.⁴

Section 2-603 modifies the common law. It provides that if a deceased devisee stands in a particular relationship to the testator, the gift to the devisee doesn't lapse; instead it's passed to the deceased devisee's descendants who survive the testator.⁵ The anti-lapse rule expresses a constructional preference against disinheriting a line of descent and, therefore, creates a strong rebuttable presumption.⁶ This presumption may be overcome, however, with evidence of the testator's contrary intent. In a majority of jurisdictions, a survival requirement in the will may indicate such intent.⁷ For example, if G's will provides for a gift of “$10,000 to A, if A survives me,” G has expressed an intent that the anti-lapse statute not apply. Consequently, if A predeceases G, the gift to A would lapse even if A is a devisee protected by the anti-lapse statute and survived by descendants.

Every state and the District of Columbia has enacted some type of anti-lapse statute.⁸ To be a good draftsman, you should be familiar with the anti-lapse statute effective in your state.⁹ When preparing a will benefiting a devisee within the class of persons protected by the applicable anti-lapse statute, you should determine whether the effect of the anti-lapse statute conforms with the testator's intention. If not, the will should opt out of the statutory default rule.

Nonademption of Specific Devises

Section 2-606 deals with the doctrine of ademption by extinction. This doctrine provides that if, at the testator's death, the testator didn't own property specifically devised in his will, the bequest is adeemed or rendered ineffective and the specific devisee takes nothing.¹⁰ The common law adopted two conflicting theories of ademption: the “identity theory” and the “intent theory.” Most courts follow the identity theory.¹¹ Under that theory, the only thing that matters is whether the testator owned the subject of the specific devise at the time of death; if he didn't, the devise is adeemed and the specific devisee takes nothing.¹² Under the intent theory, if the testator didn't own the subject of the specific devise at the time of death, the gift fails (is adeemed), unless the evidence establishes that failure would be inconsistent with the testator's intent.¹³ The UPC adopts the intent theory providing that if a gift would be adeemed, a specific devisee is entitled to a substitute gift unless it's established that ademption would be inconsistent with the testator's plan of distribution. Section 2-606 is implicated whenever you're preparing a will with a specific gift, including a gift in a handwritten list incorporated in the will. If so, you should explain the concept of ademption to the testator and ask him whether he would like to make a substitute gift in the event he doesn't own the specifically devised property at death.

Nonexoneration

Under common law, a testamentary gift of land was subject to exoneration, meaning the devisee was entitled to receive the land free and clear of encumbrances.¹⁴ Section 2-607 abrogates the common law of exoneration. Consequently, no gifts of land are subject to exoneration, unless the testator indicates otherwise. A general directive in the will to “pay all debts” doesn't entitle a devisee to exoneration. Unless the testator intends otherwise, a devisee takes a gift subject to the outstanding liens and encumbrances on it. Whenever a will provides for a gift of encumbered real or personal property, you should ask the testator whether he intends the devisee to receive the property subject to outstanding liens, or free and clear.¹⁵

Ademption by Satisfaction

Section 2-609 establishes a rebuttable presumption that lifetime transfers to a devisee aren't in satisfaction of the devisee's share of the estate, unless there's written evidence to the contrary. Such written evidence may take the form of a writing signed by the testator contemporaneously with the making of the inter vivos gift, a statement in the will that the devisee's share of the estate is to be reduced by the amount of the lifetime gift or a statement signed by the devisee acknowledging that the lifetime gift was in full or partial satisfaction of his share of the estate. To minimize confusion and conflict, if the testator has made lifetime gifts to a devisee, clearly indicate in the will whether the testator considers such gifts advancements.¹⁶

Scope of Part 7

Section 2-701 provides that the rules of construction in Part 7 apply to wills and all other types of governing instruments. Under the UPC, “governing instruments” include deeds, trusts, insurance policies, annuity contracts, payable-on-death accounts, securities registered in beneficiary form (transfer on death), pensions, profit-sharing, retirement accounts and instruments creating or exercising a power of appointment.¹⁷ As with Section 2-601, the rules of construction in Part 7 yield to a finding of contrary intention on the part of the person executing the governing instrument and such intent may be found in extrinsic evidence.

Section 2-702: Survival Requirement

At common law, a devise was effective only if the devisee survived the testator.¹⁸ A gift to a devisee who failed to survive lapsed.¹⁹ To take a transfer, a devisee was only required to survive the testator by an instant.²⁰ Application of the common law rule of survival became problematic in the early part of the 20th century when there was an increase in the number of vehicular accidents in which both driver and passenger were killed.²¹ The Uniform Simultaneous Death Act (USDA) was promulgated to deal with the devolution of property in situations in which two people were killed in a common disaster, and it couldn't be determined who survived whom.²² The original USDA provided that under such circumstances, each person, as to his property, would be deemed to have survived the other.²³ The original USDA was fine as far as it went, but it didn't adequately address the situation in which one person survived the other, but only for a short period of time.

UPC Section 2-702 addresses this issue. It provides that unless it can be established that one person survived another by 120 hours, each person, as to his property, is deemed to have survived the other. Section 2-702 modifies the common law rule that requires a devisee to survive the testator by only an instant. The original version of Section 2-702 was subsequently amended to provide that for a devisee to take a transfer, he must establish by clear and convincing evidence that he survived the testator by 120 hours.²⁴ This requirement was subsequently incorporated into the USDA.

The application of the survivorship rules of Section 2-702 and the USDA can be problematic when a married couple with a taxable estate dies within a short time of one another. For example, assume John has a gross estate of $7 million and his wife, Jane, has a gross estate of $3 million. Further assume that each spouse's will leaves all property to the surviving spouse or, if there's no surviving spouse, to the couple's children. If John dies and Jane survives him by less than 120 hours, John's estate would pass to the children under Section 2-702 and the revised USDA. Under current law, this could trigger a $700,000 federal estate tax liability. On the other hand, if, under those circumstances, John's will provided that should Jane die within 120 hours of John, she would be deemed to have survived John, his estate would pass to her. The family could then take appropriate steps to allocate John's $7 million estate between the marital share and the credit shelter trust to ensure use of the maximum amount of both spouses' applicable exclusion.²⁵ Using proper survivorship language in John's will and opting out of the default language of Section 2-702 and the USDA could save the family as much as $700,000 in federal estate taxes.

Choice of Law

Section 2-703 permits the law of any state to be selected in a governing instrument, for purposes of interpreting the instrument, regardless of where the property is located. This section has become increasingly important recently, as trusts have been drafted to take advantage of the laws of foreign jurisdictions where there's no rule against perpetuities. The governing law selected in a document will be applied unless application of that law is contrary to: (1) the surviving spouse's elective share rights; (2) the provisions relating to exempt property and allowances under Part 4 of the UPC; or (3) public policy.²⁶

Class Gifts

Section 2-705 facilitates a modern construction of gifts that identify the recipient by reference to a relationship.²⁷ It applies to the treatment, for class-gift purposes, of an adoptee, a non-marital child, a child of assisted reproduction, a gestational child or a relative by marriage. Among other things, this statute provides that an individual born out of wedlock (and that individual's descendants) is a “descendant” of his genetic parents. An adopted individual (and his descendants) is considered the descendant of the “adoptive parents,” and relatives by marriage are, presumptively, excluded from class gifts.²⁸ As with all of the other default rules in Parts 6 and 7, the rules of construction in Section 2-705 may be overcome by a finding of contrary intention. Accordingly, the testator may establish different definitions of “relationship” by the terms of his will.

Per Capita vs. Per Stirpes

Section 2-709 provides statutory definitions of “per capita at each generation” and “per stirpes.” The system of representation employed with “per capita at each generation” is the one used in the UPC's rules of intestate succession and is intended to provide equal shares to those equally related.²⁹ The definition of “per stirpes” accords with the predominant understanding of the term.³⁰ Depending on the circumstances of the testator's family, a distribution “per capita at each generation” may be more appropriate than a distribution “per stirpes.” If it's possible that the estate or trust could be distributed in a significantly disproportionate manner among beneficiaries of the same generation, you should discuss with the client whether a per capita distribution may be more appropriate than a distribution per stirpes.

Best Practices

An understanding of these 10 sections of the UPC, their numerous statutory variations or their common law counterparts suggests that you, as the scrivener, use the following best practices:

1. When drafting a revocable or irrevocable trust, determine whether any of the concepts addressed by the sections in Part 6 are relevant to the client's situation. Even though Part 6 is applicable only to wills, its sections address issues that frequently arise with clients using a trust as their primary dispositive document. In such instances, you should incorporate into the trust the requisite Part 6 default rule or its appropriate deviation;
2. When preparing a will with a gift to a member of the class of persons protected by the anti-lapse statute (that is, the testator's grandparents or the descendants of the testator's grandparents), ask the client where the property should go in the event the devisee predeceases the client;
3. If the will contains a class gift to people covered by the anti-lapse statute, ask the testator whether any of the members of the class are already deceased. If so, ask the testator whether he wants to benefit the deceased class member's descendants;³¹
4. Don't use words of survivorship recklessly. Conditioning a gift on survivorship could opt out of the anti-lapse statute and unintentionally disinherit a line of descent if the devisee is among the class of people covered by the anti-lapse statute;
5. If the will contains a specific gift, ask the testator how the devised property should pass if the specific devisee predeceases the testator. Should the property go to descendants of the deceased devisee under the anti-lapse statute, to a substitute taker or become part of the residue?
6. If the will is to contain a specific gift, ask whether the testator intends the devisee to receive a substitute gift if the specifically devised property isn't an asset of the estate at the testator's death;
7. If the property to be devised is encumbered, ask the testator whether the devisee is to take the property subject to the debt or receive it free and clear;³²
8. Ask whether the testator has made lifetime transfers to any of the devisees.³³ If so, ask him whether those transfers were gifts or advances that should be offset against the recipient's share of the estate;³⁴
9. When planning for a married couple with a taxable estate, include a provision in the will opting out of Section 2-702, or the USDA, in circumstances in which one spouse dies within 120 hours of the other;³⁵ and
10. Ask whether the testator wishes to benefit adopted or illegitimate children, stepchildren or stepgrandchildren.³⁶ Be mindful of the consequences of the new biology and the rules affecting children of assisted reproduction.

Endnotes

1. Twenty states have adopted portions of the Uniform Probate Code (UPC).
2. UPC Section 2-601 was revised to bring it into accord with the common law. The pre-1990 version of this section provided that, “The intention of a testator as expressed in his will controls the legal effect of his dispositions” (emphasis added). The effect of the pre-1990 language was to prohibit the admissibility of extrinsic evidence.

   Extrinsic evidence that might be helpful to the construction of a will includes the circumstances surrounding the execution of the will, the skill of the draftsman and, most importantly, direct evidence of intention.

3. UPC Section 2-603 (8 Part I U.L.A. 2011 Cum. Supp. at p. 122); See also Restatement (3rd) of Property (Wills and Other Donative Transfers) (2003) Section 5.5, Cmt a.
4. See UPC Section 2-603, ibid.
5. The anti-lapse statute doesn't really reverse the common law rule of lapse. It doesn't provide that a gift to a deceased devisee passes to the devisee's estate. Rather, it provides for a substitute gift to the devisee's descendants. The relatives protected under anti-lapse statutes vary. The relatives protected under Section 2-603 include the testator's grandparents, their descendants and the testator's stepchildren.
6. Restatement (3rd) of Property, supra note 3 Section 5.5, Cmt f.
7. Ibid., Cmt h.
8. Twenty-one states have enacted either the original UPC, the revised UPC or a close variation thereof. The remaining states and the District of Columbia have non-uniform anti-lapse statutes. Restatement (3rd) of Property, supra note 3 Section 5.5, Statutory Note.
9. An understanding of the effect of the applicable anti-lapse statute is important when drafting revocable trusts as well as wills. Anti-lapse statutes apply by analogy to revocable trusts. Thus, unless there's a contrary intent, if a beneficiary of a revocable trust within the class of relatives covered by the applicable anti-lapse statute predeceases the settlor, leaving descendants who survive the settlor, the beneficiary's descendants take the beneficiary's interest (unless that interest was limited to the life of the deceased beneficiary). Restatement (3rd) of Property, ibid., Cmt p.
10. Restatement (3rd) of Property, ibid., Section 5.2.
11. Ibid. See also UPC Section 2-606, supra note 3 at p. 138.
12. UPC Section 2-606, ibid.
13. The Restatement (3rd) of Property, supra note 3, has adopted the intent theory.
14. Thomas Edgar Atkinson, Handbook of the Law of Wills Section 137 (West 1953); see also In Re the Matter of the Estate of Peterson, 365 N.W.2d 300 (Minn. App. 1985).
15. If the testator intends a devise to be subject to exoneration, the will should clearly say so. For example, “I devise and bequeath to my daughter my 2011 BMW which property is now subject to a lien. If any part of the indebtedness against said vehicle remains unpaid at the time of my death, I direct my personal representative to pay the entire balance of such indebtedness, it being my intention that my daughter receive title to the vehicle free and clear of all liens and encumbrances.”
16. If the testator intends an inter vivos gift to be an advancement, include a provision clearly stating so in the governing instrument. For example, “I have advanced to my son the sum of $____ on account of and against whatever may be distributable to him from my estate, and I hereby direct my personal representative to deduct such amount from the distributive share of my son under this will.” On the other hand, if the testator doesn't consider the inter vivos gift to be an advancement, include a provision to that effect to eliminate any question about the testator's intent. For example, “It is my intention that no gift made by me in this will be diminished or extinguished by any inter vivos gifts I have made to any beneficiary named herein before the execution of this will.”
17. UPC Section 1-201(18).
18. Restatement (3rd) Property, supra note 3 Section 1.2, Cmt a.
19. Ibid.
20. Ibid.
21. Ibid.
22. The Uniform Simultaneous Death Act (USDA) has been enacted in the District of Columbia and all but three states. USDA 1993, Prefatory note. 8 B U.L.A. 143.
23. Restatement (3rd) of Property, supra note 3 Section 1.2, Statutory Notes.
24. Ibid., Section 1.2, Cmt d.
25. The husband's estate could be properly allocated between the marital share and the credit shelter share by a qualified terminable interest property election made by the personal representative of the husband's estate or a qualified disclaimer made by the personal representative or other fiduciary of the wife's estate.
26. UPC Section 2-703. The ethical and malpractice implications of a scrivener selecting as governing law the law of a state in which he isn't licensed is beyond the scope of this article. See Jeffrey A. Schoenblum, “Looking for Law in all the Right (and Wrong) Places: Trust Forum Shopping Opportunities, Unintended Consequences, and Duty of the Estate Planner,” 44th Annual Heckerling Institute on Estate Planning (2010).
27. UPC Section 2-705.
28. Ibid.
29. UPC Sections 2-709 and 2-106, supra note 3 at pp. 43-44.
30. UPC Section 2-709.
31. The anti-lapse statute applies to void gifts made to a devisee who is deceased at the time the will is executed. UPC Section 2-603.
32. If the devisee is to take the gift free and clear of encumbrances, the will should clearly say so. For example, “I devise and bequeath to my daughter my 2011 BMW, which property is now subject to a lien. If any part of the indebtedness against said vehicle remains unpaid at the time of my death, I direct my personal representative to pay the entire balance of such indebtedness, it being my intention that my daughter receive title to the vehicle free and clear of all liens and encumbrances.”
33. A good estate-planning questionnaire will ask whether the testator has made lifetime transfers to any of the devisees.
34. If the testator intends an inter vivos gift to be an advancement, include a provision clearly stating so in the governing instrument. For example, “I have advanced to my son the sum of $____ on account of and against whatever may be distributable to him from my estate, and I hereby direct my personal representative to deduct such amount from the distributive share of my son under this will.”

    If the testator doesn't consider inter vivos gifts to be advancements, include a provision to that effect so as to eliminate any question about the testator's intent. For example, “I declare that any advancements I may have made to or for the benefit of any of my children shall be in addition to, and not in satisfaction of, any gifts I may make to them in this will.”

35. In the will of the spouse with the larger gross estate, insert language providing that if the couple dies within a short time of one another, the spouse with the smaller gross estate shall be deemed to be the survivor. For example, “Surviving with respect to my spouse means that if my spouse and I die under such circumstances that it cannot be established by sufficient evidence that we died other than simultaneously, or if my spouse did survive me but died within 120 hours after my death, my spouse shall be deemed to have survived me.”
36. Ask the testator about family relationships; clients don't necessarily use terms of relationship the same way we do. Ask about descendants, adopted and illegitimate children, stepchildren and persons related by half-blood.

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Jim McNary is an attorney at Watson & Speight, P.A. in Red Wing, Minn.