1 Saint Leo University GBA 231 Business Law I .docx

1
Saint Leo University
GBA 231
Business Law I
Course Description:
The U.S legal system (constitutional framework), the judicial
system, the administrative agency system,
the legal theory of the organization (agency law, forms of
organization), an organization’s legal obligations
(torts, contracts, common law, and the Uniform Commercial
Code), and public law (employment,
securities, antitrust, consumer and environmental protection)
are reviewed.
Prerequisite:
ENG 122
Textbooks:
The textbook information which appears on our Saint Leo
Bookstore ordering site is as
follows:
Business Law (Custom) (0232, 2048). ISBN: 9780134735207

Your custom textbook was created from the following National
text(s):
Business Law: Cheeseman, H. R. (2019). Business law: legal
environment, online commerce,
business
ethics, and international issues (10th ed.). Boston: Pearson.
ISBN: 9780134729060
Term Paper:
Review all materials in Chapter 52 and conduct research on the
United States Supreme Court case of
Cruzan v. Director, Missouri Department of Health, 497 U.S.
261 (1990). The full text of this case,
along with numerous case briefs, commentaries, summaries,
etc., may be found by simply entering the
full name of the case into any major online search engine of
your choosing. Alternatively, you may use
Westlaw, Lexis or any other professional legal research
databank in your research, however, use of such
is not required. Following your research, review the following
questions:
• What was the ultimate numerical vote of the court?
• When and how can life support be withdrawn?
• How does death by refusal of treatment differ from suicide?
• How does a living will work and when does it become of legal
effect?
• What is a health care directive and how does it work?
After completing your research, summarize your answers, and,
along with any other sources, if any,

address and support your particular position/view on the
following specific issues, and, specifically, how
you would apply the Saint Leo University Core Values of
Community, Respect, and Integrity into your
actions. Be sure to use proper APA format for citations.
2
1. What are the potential foreseeable financial, psychological,
and medical, yet unintended, harmful
consequences to one’s family and friends in failing to provide a
properly executed will and living will prior
to one’s final illness and death?
2. What are the fundamental distinctions between recuperative
medical care and palliative care? Who
should be included in the decision to modify care from
recuperative to palliative? When, if ever, is the
right to refuse any and all medical care appropriate when such
virtually ensures the death of the patient?
3. What professionals, medical or otherwise, should be involved
in advising decisions concerning end-of-
life wishes? How does euthanasia differ from a simple cessation
of treatment? Who should make end of
life decisions for those who are without a family member to
take on such a role?

4. What measures can be taken to ensure the quality of ongoing
family and social relationships,
individually and as a group, to end-of-life patients? What
pitfalls are to be avoided in ensuring
maintenance of these relationships? What actions may be taken
to ensure the spiritual and existential
dimensions of the process are respected and integrated?
You must submit this assignment as a Word document to Chalk
and Wire no later than Sunday 11:59 PM
EST/EDT. Submit the Term Paper to Chalk and Wire using the
link in the Module 8 folder. Students that
do not submit the assignment to Chalk and Wire will receive a
zero. This is a key program assessment;
the results are used to ensure students are meeting program
goals. Video and PDF instructions can be
found on the course home page. PDF instructions are also
located in the Start Here folder.
1
Chapter 52 Wills, Trusts, and Estates
Veterans Cemetery
The U.S. Congress enacted the National Holiday Act of 1971,1
which made the last day in May Memorial Day,
which is a national holiday. Memorial Day is a day of
remembrance for veterans of the nation’s military
services. I miss my friend, Mark H. Dixon, with whom I served
in the U.S. Army, who died while saving a
fellow soldier.

https://jigsaw.vitalsource.com/books/9780134729046/epub/OPS/
xhtml/fileP700101479000000000000000000B221.xhtml#P70010
1479000000000000000000B224
2
Learning Objectives and Chapter Contents
Introduction to Wills, Trusts, and Estates
Will
52.1 List and describe the requirements for making a valid will.
Probate
52.2 Describe the process of probating a will.
Testamentary Gifts
52.3 Describe the different types of testamentary gifts.
Intestate Succession
52.4 Identify how property is distributed under intestacy
statutes if a person dies without a will.
Irrevocable Trusts
52.5 Define irrevocable trust and describe how an irrevocable
trust works.
Special Types of Trusts

52.6 List and describe special forms of trusts.
Living Trust
52.7 Define a living trust and describe how a living trust works.
Undue Influence
52.8 Describe how a will or trust may be found invalid under
the doctrine of undue influence.
Living Will and Health Care Directive
52.9 Define a living will and describe why a person would
execute a living will and health care directive.
Contemporary Environment Right to Die
“When you have told someone you have left him a legacy, the
only decent thing to do is to die at once.”
—Samuel Butler (1835–1902)
xhtml/fileP700101479000000000000000000AE64.xhtml#P7001
01479000000000000000000AEB8

xhtml/fileP700101479000000000000000000AEC4.xhtml#P7001
01479000000000000000000AEC4
01479000000000000000000AEC8
xhtml/fileP700101479000000000000000000AF54.xhtml#P70010
1479000000000000000000AF54
xhtml/fileP700101479000000000000000000AF54.xhtml#P70010
1479000000000000000000AF58
xhtml/fileP700101479000000000000000000AF8C.xhtml#P7001
01479000000000000000000AF8C
01479000000000000000000AF90
1479000000000000000000B002
1479000000000000000000B006
xhtml/fileP700101479000000000000000000B04C.xhtml#P7001
01479000000000000000000B04C
01479000000000000000000B050
1479000000000000000000B097
1479000000000000000000B09B

xhtml/fileP700101479000000000000000000B0C0.xhtml#P7001
01479000000000000000000B0C0
xhtml/fileP700101479000000000000000000B0C0.xhtml#P7001
01479000000000000000000B0C4
1479000000000000000000B101
1479000000000000000000B105
1479000000000000000000B141
1479000000000000000000B146
1479000000000000000000B166
3
Introduction to Wills, Trusts, and Estates
Disinherit: The prankish action of the ghosts in cutting the
pockets out of trousers.
Frank McKinney Hubbard
The Roycroft Dictionary (1923)
Wills and trusts are means of transferring property. Wills
transfer property on a person’s death. They permit

people to state exactly where they want their property to go
when they die. If a person dies intestate—that is,
without a will—the deceased’s property is distributed to
relatives as provided in the state statute. The property
escheats (goes) to the state if there are no relatives.
Trusts are used to transfer property that is to be held and
managed for the benefit of another person or
persons. A trust can be created to come into effect during one’s
lifetime. Trusts may also be created during
one’s lifetime and be worded to become effective only on the
trustor’s (or grantor’s) death. A living trust is a
special type of trust used for estate planning.
A living will and health care directive can be created by an
individual. A living will sets forth a person’s
instructions regarding emergency medical treatment and
whether to be kept alive on life support systems.
A health care directive names an individual or individuals who
can make health care decisions if the maker
of the directive is unable to do so.

4
Will
52.1 List and describe the requirements for making a valid will.
A will is a declaration of how a person wants his or her property
to be distributed at death. It is a testamentary
deposition of property. The person who makes a will is called a
testator (if male) or testatrix (if female). Some
states use the designation testator for both male and female
persons. The persons designated in the will to
receive the testator’s property are called beneficiaries (see
Exhibit 52.1).
Exhibit 52.1
Parties To A Will
Figure 52.1 Full Alternative Text
Requirements for Making a Will
Every state has a Statute of Wills that establishes the
requirements for making a valid will in that state. These
requirements are the following:
xhtml/fileP700101479000000000000000000BA39.xhtml#P7001
01479000000000000000000D692

01479000000000000000000D3E4
01479000000000000000000D3E4
01479000000000000000000D3E4
01479000000000000000000BCDE
01479000000000000000000AEDE
longalt/la_pg881_ex01.xhtml#la_pg881_ex01
01479000000000000000000D2CB
5
• Testamentary capacity. The testator must have been of legal
age and “sound mind” when the will was made.
The courts determine testamentary capacity on a case-by-case
basis. The legal age for executing a will is set
by state statute.
• Writing. Wills must be in writing to be valid (except for dying
declarations, discussed later in this chapter).
The writing may be formal or informal. Although most wills are
typewritten, they can be handwritten (see the
later discussion of holographic wills). The writing may be on

legal paper, other paper, scratch paper,
envelopes, napkins, or the like. A will may incorporate other
documents by reference.
Say not you know another entirely till you have divided an
inheritance with him.
Johann Kaspar Lavater (1741–1801)
• Testator’s or testatrix’s signature. Wills must be signed. Most
jurisdictions require the testator’s
signature or testatrix’s signature to appear at the end of the will.
This step is to prevent fraud that could
occur if someone added provisions to the will below the
testator’s signature.
Example Courts have held that initials (R.K.H.), a nickname
(Buffy), title (mother), and even an X is a valid
signature on a will if it can be proven that the testator intended
it to be his or her signature.
Attestation by Witnesses
Wills must be attested to by mentally competent witnesses.
Although state law varies, most states
require attestation by 2 or 3 witnesses. The witnesses do not
have to reside in the jurisdiction in which the testator
is domiciled. Most jurisdictions stipulate that interested parties
(e.g., a beneficiary under the will, the testator’s
attorney) cannot be witnesses. If an interested party has attested
to a will, state law voids either any clauses that
benefit such person or voids the entire will. Witnesses usually
sign a will following the signature of the testator.
These signatures are called the attestation clause. Most
jurisdictions require that each witness attest to the will
in the presence of the other witnesses. A will that meets the

requirements of the Statute of Wills is called a formal
will. A sample will is shown in Exhibit 52.2
Exhibit 52.2
Will
01479000000000000000000D3DE
01479000000000000000000D3E7
01479000000000000000000D3E7
01479000000000000000000D3E7
01479000000000000000000BC4A
01479000000000000000000BC4D
01479000000000000000000C522
01479000000000000000000C522
01479000000000000000000AF0B

6
Figure 52.2 Full Alternative Text
Codicil
A will cannot be amended by merely striking out existing
provisions on the will and adding new provisions on
the will itself. Preparing a codicil is the legal way to change an
existing will. A codicil is a separate document
that contains provisions that amend a will. The codicil must be
executed with the same formalities as a will. In
addition, it must incorporate by reference the will it is
amending. The codicil and the will are then read as 1
instrument.
Revoking a Will
A will may be revoked by acts of the testator. Revocation of a
will occurs if the testator intentionally tears, burns,
obliterates, or otherwise destroys it. A properly executed
subsequent willrevokes a prior will.
Wills can also be revoked by operation of law. For example,
divorce or annulment revokes disposition of property
to the former spouse under a will. The remainder of the will is
valid. The birth of a child after a will has been
executed does not revoke the will but does entitle the child to
receive a share of a parent’s estate, as determined
by state statute.
Joint and Mutual Wills
If 2 or more testators execute the same instrument as their will,
the document is called a joint will. Each party
bequeaths property to the other person. A joint will includes a

stipulation for how the property is to be
distributed when the second person dies. A joint will is an
enforceable contract. The second party cannot change
the will once the first person dies (e.g., disinherit the named
beneficiaries or change beneficiaries). Both parties
must agree to revoke a joint will.
Special Types of Wills
The law recognizes several types of wills that do not meet all
the requirements discussed previously. The
special types of wills admitted by the courts include the
following:
• Holographic wills. Holographic wills are entirely handwritten
and signed by the testator. The writing may
be in ink, pencil, crayon, or some other medium. Many states
recognize the validity of such wills even
though they are not witnessed.
• Nuncupative wills. Nuncupative wills are oral wills that are
made before witnesses. Such wills are usually
valid only if they are made during the testator’s last illness and
before he or she is about to die. They are
sometimes called dying declarations, or deathbed wills.
Simultaneous Deaths
Sometimes people who would inherit property from each other
die simultaneously. If it is impossible to
determine who died first, the question becomes one of
inheritance. The Uniform Simultaneous Death Act, a
longalt/la_pg883_ex02.xhtml#la_pg883_ex02

01479000000000000000000BE3A
01479000000000000000000D019
01479000000000000000000D313
01479000000000000000000C8AF
01479000000000000000000C69E
01479000000000000000000CBD6
01479000000000000000000CBD6
01479000000000000000000D582
7
model act adopted by many states, provides that each deceased
person’s property is distributed as though that
person had survived.
Example A husband and wife make wills that leave their entire
estate to each other. The husband and wife are
killed simultaneously in an airplane crash. Here, the husband’s
property would go to his relatives, and the wife’s
property would go to her relatives.

Probate
52.2 Describe the process of probating a will.
When a person dies, his or her property must be collected, debts
and taxes paid, and the remainder of the estate
distributed to the beneficiaries of the will or the heirs under the
state intestacy statute. This process is
called probate, or settlement of the estate. The process and
procedures for settling an estate are governed by
state statute. A specialized state court, called the probate court,
usually supervises the administration and
settlement of estates.
A personal representative must be appointed to administer an
estate during its settlement phase. If a testator’s
will designates a personal representative, that person is called
an executor(male) or executrix (female). If no one
is named or if the decedent dies intestate, the court appoints an
administrator (male) or administratrix (female).
Some states use the designations executor and administrator
whether the representative is a male or female. This
party is usually a relative of the deceased or a bank. An attorney
is often appointed to help administer the estate
and to complete the probate.
Testamentary Gifts
52.3 Describe the different types of testamentary gifts.
A gift of real estate by will is called a devise. A gift of personal
property by will is called a bequest, or legacy.
Gifts in wills can be specific, general, or residuary:
• Specific gift. Specific gifts in a will are gifts of specifically
named pieces of property.

Example A gift of a ring, a boat, or a piece of real estate in a
will is a specific gift.
• General gift. General gifts are gifts that do not identify the
specific property from which the gift is to be
made. These are gifts of an amount of money.
Example A gift of $100,000 to a named beneficiary is an
example of a general gift. The cash can come from
any source in the decedent’s estate.
• Residuary gift. Residuary gifts are gifts that are established by
a residuary clause in a will. This means that
any portion of the estate left after the debts, taxes, and specific
and general gifts have been paid belongs to
the person or persons named in the residuary clause. Some wills
contain only a residuary gift and do not
contain specific or general gifts.
Example A clause in a will that states, “I give my daughter the
rest, remainder, and residual of my estate” is
an example of a residuary gift.
01479000000000000000000CE2F
01479000000000000000000CE33
01479000000000000000000CD3E

01479000000000000000000C3A8
01479000000000000000000BAE3
01479000000000000000000BAE3
01479000000000000000000C103
01479000000000000000000BCE1
01479000000000000000000D261
01479000000000000000000C5CB
01479000000000000000000CFCE
01479000000000000000000CFCB
8
A person who inherits property under a will or an intestacy
statute takes the property subject to all the outstanding
claims against it (e.g., liens, mortgages). A person can renounce
an inheritance and often does where the liens or
mortgages against the property exceed the value of the property.

Lineal Descendants
A testator’s will often states that property is to be left to lineal
descendants (e.g., children, grandchildren,
great-grandchildren) either per stirpes or per capita. The
differences between these 2 methods are discussed in
the following paragraphs.
Per Stirpes Distribution to Lineal Descendants
Pursuant to per stirpes distribution, the lineal descendants
inherit by representation of their parent; that is, they
split what their deceased parent would have received. If their
parent is not deceased, they receive nothing.
Example Anne dies without a surviving spouse, and she had 3
children, Bart, Beth, and Bruce. Bart, who survives
his mother, has no children. Beth has 1 child, Carla, and Carla
has 1 child, Donovan, and they all survive Anne.
Bruce, who predeceased his mother, had 2 children, Clayton and
Cathy; and Cathy, who predeceased Anne, had
2 children, Deborah and Dominic, both of whom survive Anne.
If Anne leaves her estate to her lineal
descendants per stirpes, Bart and Beth each get one-third, Carla
receives nothing because Beth is alive, Donovan
receives nothing because both Beth and Carla are alive, Clayton
gets one-sixth, and Deborah and Dominic each
get one-twelfth. See Exhibit 52.3.
Exhibit 52.3
Per Stirpes Distribution To Lineal Descendants

01479000000000000000000CF94
01479000000000000000000C9B0
01479000000000000000000CD01
01479000000000000000000AFD2
9
Per Capita Distribution to Lineal Descendants
Pursuant to per capita distribution, the lineal descendants
equally share the property of the estate. That is,
children of the testator share equally with grandchildren, great-
grandchildren, and so forth.
Example Suppose the facts are the same as in the previous
example, except that Anne leaves her estate to her
lineal descendants per capita. In this case, all the surviving
lineal descendants—Bart, Beth, Carla, Clayton,
Donovan, Deborah, and Dominic—share equally in the estate.
That is, they each get one-seventh of Anne’s estate.
See Exhibit 52.4.
Exhibit 52.4
Per Capita Distribution To Lineal Descendants

01479000000000000000000CCFB
01479000000000000000000AFE1
10
Ademption
If a testator leaves a specific gift of property to a beneficiary
but the property is no longer in the estate of the
testator when he or she dies, the beneficiary receives nothing.
This doctrine is called the doctrine of ademption.
Example A testator leaves his primary house, worth $1 million,
to his son in his will and leaves the remainder of
his estate (which is worth $1 million at the signing of the will)
to his daughter. Several years before dying, the
testator sells his house for $1 million and places the money in a
bank. When the testator dies, his estate is worth
$2 million, which includes the $1 million in the bank that is the
proceeds of the sale of the house. Here, because
of ademption—the testator does not own the house when he
dies—the son receives nothing. The daughter receives
the testator’s entire $2 million estate
Abatement
If a testator’s estate is not large enough to pay all the devises

and bequests, the doctrine of abatement applies.
The doctrine works as follows:
• If a will provides for both general and residuary gifts, the
residuary gifts are abated first.
Examples A testator executes a will when he owns $500,000 of
property that leaves (1) $100,000 to the Red
Cross, (2) $100,000 to a university, and (3) the residual to his
niece. If the testator dies with this $500,000
estate, the Red Cross and the university would each receive
$100,000, and the niece would receive $300,000.
However, if when the testator dies, his estate is worth only
$225,000, the Red Cross, and the university would
each receive $100,000, and the niece would receive $25,000.
• If a will provides only for general gifts, the reductions are
proportionate.
Examples A will bequests $200,000 to each of 2 beneficiaries.
However, when the testator dies, his estate is
worth only $100,000. Here, each beneficiary will receive
$50,000.
Intestate Succession
52.4 Identify how property is distributed under intestacy
statutes if a person dies without a will.
If a person dies without a will or trust—that is, intestate—or if
a will or trust fails for some legal reason, the
property is distributed to relatives pursuant to a state’s intestacy
statute.
Relatives who receive property under intestacy statutes are
called heirs. Although intestacy statutes differ from
state to state, the general rule is that the deceased’s real

property is distributed according to the intestacy statute
of the state where the real property is located, and the
deceased’s personal property is distributed according to the
intestacy statute of the state where the deceased had permanent
residence.
Intestacy statutes usually leave the deceased’s property to the
heirs in this order: spouse, children, lineal heirs
(e.g., grandchildren, parents, brothers and sisters), collateral
heirs (e.g., aunts, uncles, nieces, nephews), and other
next of kin (e.g., cousins).
If the deceased has no surviving relatives, then the deceased’s
property escheats (goes) to the state. In-laws do
not inherit under most intestacy statutes.
01479000000000000000000BAB8
01479000000000000000000BA58
01479000000000000000000C851
01479000000000000000000C84E
01479000000000000000000C851
11
To avoid the distribution of an estate as provided in an intestacy

statute, a person should have a properly written,
signed, and witnessed will or trust that distributes the estate
property as the testator wishes.
Concept Summary
Comparison of Dying with and Without a Valid Will
Situation Parties Who Receive Deceased’s Property

Deceased dies with a valid will Beneficiaries named in the will.
Deceased dies without a valid will Heirs set forth in the
applicable state intestacy statute. If
there are no heirs, the deceased’s property escheats to the
state.
12
Irrevocable Trusts
52.5 Define irrevocable trust and describe how an irrevocable
trust works.
A trust is a legal arrangement under which one person (the
settlor or trustor) delivers and transfers legal title to
property to another person, bank, or other entity (the trustee), to
be held and used for the benefit of a third person
or entity (the beneficiary). The property and assets held in trust
are called the trust corpus, or trust res. The
trustee has legal title to the trust corpus, and the beneficiary has
equitable title. Unlike wills, trusts are not public
documents, so property can be transferred in privacy. An
express trust is voluntarily created by the settlor. It is
usually written, and the written agreement is called a trust
instrument, or trust agreement. A trust is irrevocable
unless the settlor reserves the right to revoke it. A trust that
cannot be revoked is referred to as an irrevocable
trust. Exhibit 52.5 shows the parties to a trust.
Exhibit 52.5
Trust

A trust can be created and becomes effective during a trustor’s
lifetime or it can be created to become effective
on the trustor’s death. During the existence of a trust, the
trustee collects money owed to the trust, pays taxes and
necessary expenses of the trust, makes investment decisions,
pays the income to the income beneficiary, and
keeps necessary records of transactions.
01479000000000000000000D48A
01479000000000000000000D493
01479000000000000000000D48D
01479000000000000000000C3D8
01479000000000000000000D490
01479000000000000000000C87C
01479000000000000000000C87C

01479000000000000000000B06B
13
Beneficiaries
Trusts often provide that any trust income is to be paid to a
person or an entity called the income beneficiary.
The person or entity to receive the trust corpus on the
termination of the trust is called the remainder beneficiary.
The income beneficiary and the remainder beneficiary can be
the same person or different persons. The designated
beneficiary can be any identifiable person, animal (e.g., a pet),
charitable organization, or other institution or
cause that the settlor chooses. There can be multiple income and
remainder beneficiaries. An entire class of
persons—for example, “my grandchildren”—can be named.
A trust can allow the trustee to invade (use) the trust corpus for
certain purposes. These purposes can be named
(e.g., “for the beneficiary’s college education”). The trust
agreement usually specifies how the receipts and
expenses of the trust are to be divided between the income
beneficiary and the remainder beneficiary.
Generally, the trustee has broad management powers over the
trust property. Thus, the trustee can invest the trust
property to preserve its capital and make it productive. The
trustee must follow any restrictions on investments
contained in the trust agreement or state statute.
Inter Vivos Trust
An inter vivos trust is created and its assets are distributed to
the trust while the settlor is alive. The settlor
transfers legal title of property to a named trustee to hold,

administer, and manage for the benefit of named
beneficiaries. The trust can be for a stated period of time (e.g.,
10 years) or until some event happens (e.g., the
settlor dies). The trust sometimes provides that an income
beneficiary will receive income from the trust until the
trust ends. The trust provides what will happen to the trust
assets when the trust ends, such as being distributed to
named beneficiaries.
Examples Grandmother places cash, stock, bonds, and an
apartment building in a trust while she is alive. She
names a bank to administer the trust. Grandmother names her
daughter as the income beneficiary of the trust; that
is, the trust will pay the daughter interest income from bonds,
dividends from stock and profits from the apartment
building while the daughter is alive. The trust provides that it
will terminate on the death of the daughter. Three
of grandmother’s grandchildren are named remainder
beneficiaries of the trust with equal shares. If the daughter
lives 20 years, the trust terminates at that time, and the assets of
the trust are distributed to the grandchildren in
equal shares. In this trust arrangement, when the grandmother
dies is inconsequential.
Testamentary Trust
A testamentary trust is created by will. In other words, the trust
comes into existence when the settlor dies.
Example Grandfather has a will that provides that when he dies,
his estate will be placed in a testamentary trust.
Grandfather names a bank to be trustee to administer the trust
and invest its assets. The trust provides that when
his grandson reaches the age of 25, the trust will terminate, and
he will be given legal title to the assets.
Grandfather dies when his grandson is age 10. The trust will
exist for the next 15 years until the grandson reaches

the age of 25. At that time, the trust terminates and the
grandson will receive possession and legal title to the
assets.
01479000000000000000000C745
01479000000000000000000CF8B
01479000000000000000000C812
01479000000000000000000D3E1
14
Special Types of Trust
52.6 List and describe special forms of trusts.
There are several special types of trusts. These are described in
the following paragraphs.
Constructive Trust
A constructive trust is an equitable trust that is implied by law
to avoid fraud, unjust enrichment, and injustice.
In constructive trust arrangements, the holder of the title to

property (i.e., the trustee) holds the property in trust
for its rightful owner. When a constructive trust is imposed, the
party who is the implied trustee cannot sell or
otherwise transfer ownership to the property or give a mortgage
on the property.
Example Thad and Kaye are partners. Kaye embezzles
partnership funds and uses the stolen funds to purchase a
piece of real estate. In this case, the court can impose a
constructive trust whereby Kaye (who holds actual title
to the land) is considered a trustee who is holding the property
in trust for Thad, its rightful owner.
Resulting Trust
A resulting trust is implied from the conduct of the parties.
Example Henry is purchasing a piece of real estate but cannot
attend the closing. He asks his brother, Gregory,
to attend the closing and take title to the property until he can
return. In this case, Gregory holds the title to the
property as trustee for Henry until he returns.
Charitable Trust
A charitable trust is created for the benefit of a segment of
society or society in general.
Example A trust that is created for the construction and
maintenance of a public park is an example of a
charitable trust.
Spendthrift Trust
A spendthrift trust is designed to prevent a beneficiary’s
personal creditors from reaching his or her trust
interest. All control over the trust is removed from the
beneficiary. Personal creditors still can go after trust
income that is paid to the beneficiary, however.

Totten Trust
A Totten trust is created when a person deposits money in a
bank account in his or her own name and holds it
as a trustee for the benefit of another person. A Totten trust is a
tentative trust because (1) the trustee can add or
withdraw funds from the account and (2) the trust can be
revoked at any time prior to the trustee’s death or prior
to completing delivery of the funds to the beneficiary.
01479000000000000000000BF38
01479000000000000000000CFEF
01479000000000000000000BDD0
01479000000000000000000D270
01479000000000000000000D448
15
Living Trust
52.7 Define a living trust and describe how a living trust works.
Living trusts have become a popular means of holding property
during a person’s lifetime and distributing the

property on that person’s death. A living trust works as follows.
During life, a person establishes a living trust,
which is a legal entity used for estate planning. A living trust is
also referred to as a grantor’s trust, or a
revocable trust. The person who creates the trust is called the
grantor (or the trustor).
Benefits of a Living Trust
The primary purpose of using a living trust is to avoid probate
associated with using a will. If a person dies with
a will, the will must be probated so that the deceased’s assets
can be properly distributed according to the will. A
probate judge is named to oversee the probate process, and all
documents, including the will, are public record.
A living trust, on the other hand, is private. When the grantor
dies, the assets are owned by the living trust and
are therefore not subject to probate proceedings. In addition, if
real property is owned in more than 1 state and a
will is used, ancillary probate must be conducted in the other
state. If a living trust is used, ancillary probate is
avoided.
Living trusts are often promoted for claimed benefits that,
however, do not exist. The true facts are that a living
trust:
• Does not reduce estate taxes any more than a will.
• Does not reduce the grantor’s income taxes. All the income
earned by the trust is attributed to the grantor,
who must pay income taxes on the earnings just as if the trust
did not exist.
• Does not avoid creditors. Thus, creditors can obtain liens
against property in the trust.
• Is subject to property division on divorce.
• Is usually not less expensive to create than a will. Both

require payments to lawyers and usually to
accountants and other professionals to draft and probate a will
or draft and manage a living trust.
• Does not avoid controversies on the grantor’s death. Like
wills, living trusts can be challenged for lack of
capacity, undue influence, duress, and other legal grounds.
Funding and Operation of a Living Trust
To fund a living trust, the grantor transfers title to his or her
property to the trust. This property is called the trust
corpus. Bank accounts, stock certificates, real estate, personal
property, intangible property, and other property
owned by the grantor must be retitled to the trust’s name. For
example, the grantor must execute deeds transferring
title to real estate to the trust. Once property is transferred to
the trust, the trust is considered funded. A living
trust is revocable during the grantor’s lifetime. Thus, a grantor
can later change his or her mind and undo the trust
and retake title of the property in his or her own name.
A living trust names a trustee who is responsible for
maintaining, investing, buying, or selling trust assets. The
trustee is usually the grantor. Thus, the grantor who establishes
the trust does not lose control of the property
placed in the trust and may manage and invest trust assets
during his or her lifetime. The trust should name
a successor trustee to replace the grantor-trustee if the grantor
becomes incapacitated or too ill to manage the
trust.
01479000000000000000000C9BF

01479000000000000000000C647
01479000000000000000000D32E
16
Beneficiaries
A living trust names a beneficiary or beneficiaries who are
entitled to receive income from the living trust while
it is in existence and to receive the property of the trust when
the grantor dies. Usually the grantor is the income
beneficiary, who receives the income from the trust during his
or her lifetime. On the death of the grantor, assets
of the trust are distributed to the remainder beneficiary or
beneficiaries named in the trust. The designated trustee
has the fiduciary duties of identifying assets, paying creditors,
paying income and estate taxes, transferring assets
to named beneficiaries, and rendering an accounting.
Undue Influence
52.8 Describe how a will or trust may be found invalid under
the doctrine of undue influence.
A will or trust may be found to be invalid if it was made
because of undue influence on the testator. Undue
influence can be inferred from the facts and circumstances
surrounding the making of a will or trust.
Example If an 85-year-old woman leaves all her property to the
lawyer who drafted her will and ignores her
blood relatives, the court is likely to presume undue influence.

Undue influence is difficult to prove by direct evidence, but it
may be proved by circumstantial evidence. The
court considers elements such as the following to determine the
presence of undue influence:
• The benefactor and beneficiary are involved in a relationship
of confidence and trust.
• The will or trust contains substantial benefit to the
beneficiary.
• The beneficiary caused or assisted in effecting execution of
the will or trust.
• There was an opportunity to exert influence.
• The will or trust contains an unnatural disposition of the
testator’s property.
• The bequests constitute a change from a former will or trust.
• The testator or settlor was highly susceptible to undue
influence.
Living Will and Health Care Directive
52.9 Define a living will and describe why a person would
execute a living will and health care directive.
Technological breakthroughs have greatly increased the life
span of human beings. This same technology,
however, permits life to be sustained long after a person is
“brain dead.” Some people say they have a right to
refuse life-extending treatment. Others argue that human life
must be preserved at all costs.
In 1990, in Cruzan v. Director, Missouri Department of Health,2
the U.S. Supreme Court ruled that the right to
refuse medical treatment is a personal liberty protected by the
Due Process Clause of the U.S. Constitution. The
Court stated that this interest must be expressed through clear

and convincing proof that the patient did not want
to be sustained by artificial means.
01479000000000000000000D536
01479000000000000000000C04B
1479000000000000000000B226
17
Living Will
The clear message of the Supreme Court’s opinion in the Cruzan
case is that people who do not want their life
prolonged indefinitely by artificial means should sign a living
will that stipulates their wishes before catastrophe
strikes and they become unable to express themselves because
of an illness or an accident. The living will should
state which lifesaving measures the signor does and does not
want. In addition, the signor can specify that any
such treatments should be withdrawn if doctors determine that
there is no hope of a meaningful recovery. A living
will must provide clear and convincing proof of a patient’s
wishes with respect to medical treatment.
Health Care Directive
Either in a living will or in a separate document, usually called
a health care directive, or health care proxy,
the maker should name someone, such as a spouse or another

relative or trusted party, to be the maker’s health
care agent to make all health care decisions in accordance with
the wishes outlined in the living will. An
alternative person should also be named in case the originally
designated health care agent is unable or chooses
not to serve in that capacity.
***APA CITATION: Cheeseman, H. R. Business Law.
[Bookshelf]. Retrieved from https://full-
bookshelf.vitalsource.com/#/books/9780134729046/ ***
01479000000000000000000C9C5
01479000000000000000000C67D
01479000000000000000000C680
01479000000000000000000C67D
01479000000000000000000C67D
https://full-bookshelf.vitalsource.com/#/books/9780134729046/
https://full-
bookshelf.vitalsource.com/#/books/9780134729046/Saint Leo

UniversityPrerequisite:Textbooks:Term
Paper:ADP55DF.tmpChapter 52 Wills, Trusts, and
EstatesLearning Objectives and Chapter ContentsIntroduction to
Wills, Trusts, and EstatesWillExhibit 52.1Requirements for
Making a WillAttestation by WitnessesExhibit
52.2CodicilRevoking a WillJoint and Mutual WillsSpecial
Types of WillsSimultaneous DeathsProbateTestamentary
GiftsLineal DescendantsPer Stirpes Distribution to Lineal
DescendantsExhibit 52.3Per Capita Distribution to Lineal
DescendantsExhibit 52.4AdemptionAbatementIntestate
SuccessionConcept SummaryIrrevocable
TrustsBeneficiariesInter Vivos TrustTestamentary TrustSpecial
Types of TrustConstructive TrustResulting TrustCharitable
TrustSpendthrift TrustTotten TrustLiving TrustBenefits of a
Living TrustFunding and Operation of a Living
TrustBeneficiariesUndue InfluenceLiving Will and Health Care
DirectiveLiving WillHealth Care Directive

1 Saint Leo University GBA 231 Business Law I .docx

Recommended

Recommended

More Related Content

Similar to 1 Saint Leo University GBA 231 Business Law I .docx

Similar to 1 Saint Leo University GBA 231 Business Law I .docx (20)

More from jeremylockett77

More from jeremylockett77 (20)

Recently uploaded

Recently uploaded (20)

1 Saint Leo University GBA 231 Business Law I .docx