Uniform Bar Examination (UBE) Business Associations, Trusts, and Estates Syllabus

What is required to maintain a shareholder derivative suit, and how does it differ from a direct suit?

A derivative suit enforces the corporation's rights: the plaintiff must have owned stock at the time of the wrong (contemporaneous ownership), make a demand on the board (or show futility), and recovery goes to the corporation. A direct suit enforces the shareholder's own rights and recovery goes to the shareholder.

What corporate actions are classified as fundamental changes requiring board approval plus a shareholder vote?

Mergers, consolidations, share exchanges, sale of substantially all assets outside the ordinary course, conversions, dissolution, and amendments to the articles. These require board resolution plus shareholder approval (commonly a majority of shares entitled to vote under the MBCA).

What are dissenters' (appraisal) rights and when do they apply?

Appraisal rights allow a shareholder who objects to certain fundamental changes (e.g., merger, share exchange, sale of substantially all assets) to compel the corporation to buy their shares at fair value. The shareholder must object before the vote, not vote in favor, and demand payment.

What are the four elements required to create a valid private express trust?

(1) A settlor with capacity and intent to create a trust, (2) a trustee (court will appoint one if missing), (3) ascertainable beneficiaries, and (4) trust property (res). A valid trust purpose is also required, and the trust must usually be funded.

What is the difference between a charitable trust and a private express trust regarding beneficiaries and duration?

A charitable trust must have a charitable purpose benefiting the community (not ascertainable individuals) and is exempt from the Rule Against Perpetuities (may last indefinitely). The cy pres doctrine allows a court to redirect it to a similar purpose if the original becomes impossible/impractical.

Distinguish a resulting trust from a constructive trust.

A resulting trust arises by implication to return property to the settlor when an express trust fails or its purpose is fulfilled (a reversionary, equitable remedy). A constructive trust is an equitable remedy imposed to prevent unjust enrichment from fraud, wrongdoing, or breach, forcing the wrongful holder to convey title.

What is a spendthrift trust and what is its general effect on creditors?

A spendthrift trust restrains the beneficiary from voluntarily or involuntarily transferring their interest, so creditors generally cannot reach the beneficiary's interest until distributions are made. Exceptions typically include claims for child/spousal support, government claims, and necessities.

Compare a mandatory trust, a discretionary trust, and a support trust.

Mandatory: trustee must distribute according to the terms (no discretion). Discretionary: trustee has discretion over whether/how much to distribute. Support trust: trustee must distribute as needed for the beneficiary's support, health, education, and maintenance.

What are a trustee's core fiduciary duties in trust administration?

Duty of loyalty (administer solely in beneficiaries' interest, no self-dealing), duty of prudence/care, duty of impartiality among beneficiaries, duty to diversify investments, duty not to delegate improperly, and duties to account and inform beneficiaries.

What investment standard governs a trustee under modern law, and what does it require?

The Uniform Prudent Investor Act standard: the trustee must invest as a prudent investor by considering the entire portfolio as a whole, balancing risk and return, and diversifying investments unless special circumstances make it imprudent. Performance is judged on the overall portfolio, not individual assets.

What is the trustee's duty of loyalty's 'no further inquiry' rule for self-dealing?

When a trustee engages in self-dealing, the transaction is voidable by the beneficiary without further inquiry into the trustee's good faith or the fairness of the transaction. Good faith and fair price are no defense; only beneficiary consent or settlor/court authorization protects the trustee.

How does the principal/income distinction affect allocation between life beneficiary and remainderman?

Ordinary receipts (interest, dividends, rent) and ordinary expenses are allocated to income (paid to the income/life beneficiary). Extraordinary receipts (sale proceeds, principal repayments) and capital expenses are allocated to principal (held for the remainderman). The Uniform Principal and Income Act permits adjustments for impartiality.

Under the UTC, when may a trust be modified or terminated by consent of the beneficiaries while the settlor is alive?

If the settlor and all beneficiaries consent, an irrevocable trust may be modified or terminated even if it conflicts with a material purpose. If the settlor is unavailable, all beneficiaries may modify/terminate only if doing so is not inconsistent with a material purpose of the trust.

What is the Claflin doctrine regarding termination of a trust by beneficiaries?

Under the Claflin (material purpose) doctrine, beneficiaries cannot compel termination of a trust, even if all consent, if termination would frustrate a material purpose of the settlor (e.g., spendthrift provisions, support trusts, age-based distributions).

When may a court modify the administrative or distributive terms of a trust under the doctrine of changed circumstances (equitable deviation)?

A court may modify administrative terms when, due to circumstances the settlor did not anticipate, compliance would defeat or substantially impair the trust's purposes. The UTC also permits modification to further the settlor's probable intent and reformation to correct mistakes shown by clear and convincing evidence.

When does intestate succession apply, and who typically takes if the decedent leaves a spouse and descendants?

Intestacy applies when a person dies without a valid will (or partially, for property not disposed of). Under the UPC, if all descendants are also the surviving spouse's, the spouse takes the entire estate; if there are descendants from another relationship, the spouse takes a set amount plus a fraction, with the rest to descendants.

What is the difference between per stirpes, per capita with representation, and per capita at each generation?

Per stirpes: divide shares at the first generation (children) regardless of survivors. Per capita with representation (classic per capita): divide at the first generation with living takers. Per capita at each generation (UPC): divide equally at the first generation with survivors, then pool and re-divide dropping shares equally among the next generation.

How does the law treat adopted children, half-bloods, and posthumous children in intestate succession?

Adopted children inherit from and through adoptive parents (and generally not biological parents). Half-blood relatives inherit equally with whole-blood relatives under the UPC. Posthumous children (in gestation at death) inherit as if born during the decedent's life if later born alive.

What is the 120-hour survival rule and the slayer rule in succession?

Under the UPC, an heir or beneficiary must survive the decedent by 120 hours (5 days) to take, or is treated as predeceasing. The slayer rule bars a person who feloniously and intentionally kills the decedent from inheriting; the killer is treated as having predeceased the victim.

What is advancement and how is it accounted for in intestacy?

An advancement is a lifetime gift to an heir intended as a prepayment of their intestate share. Under the UPC it counts against the heir's share only if declared in a contemporaneous writing by the donor or acknowledged in writing by the heir. Using the hotchpot, the advancement is added back to the estate, then deducted from that heir's share.

What are the standard formal requirements for executing a valid attested will?

(1) A writing, (2) signed by the testator (or by another at the testator's direction and presence), and (3) signed by at least two witnesses who saw the testator sign or acknowledge the will/signature. The testator must have testamentary intent and capacity. The UPC also recognizes harmless-error/substantial-compliance to excuse defects.

What level of mental capacity must a testator have to make a valid will?

Testamentary capacity requires that the testator understand (1) the nature/extent of their property, (2) the natural objects of their bounty (family/heirs), (3) the nature of the act (making a will), and (4) how these relate to form an orderly disposition plan. This is a lower threshold than capacity to contract.

What is a holographic will and what does it require?

A holographic will is an unwitnessed will whose material provisions (and signature) are in the testator's own handwriting. It is valid in jurisdictions that recognize it; witnesses are not required, but testamentary intent must be shown. The UPC validates it if signed and the material portions are handwritten.

Distinguish undue influence, duress, and fraud as grounds to challenge a will.

Undue influence: a wrongdoer exerts such control over the testator that the will reflects the influencer's intent, not the testator's (susceptibility, opportunity, disposition, and unnatural result). Duress: influence by force or threats. Fraud: intentional misrepresentation inducing the testator to make or change the will (fraud in the inducement or in the execution).

What is the doctrine of integration versus incorporation by reference for wills?

Integration: all papers present at execution and intended to be part of the will are treated as the will. Incorporation by reference: a separate writing not executed with will formalities is given effect if it existed at execution, the will manifests intent to incorporate it, and it is described with sufficient certainty to be identified.

How may a will be revoked, and what is dependent relative revocation?

A will may be revoked by a subsequent will/codicil (express or by inconsistency) or by a physical act (burning, tearing, canceling) done with intent to revoke. Dependent relative revocation (DRR) disregards a revocation that was based on a mistaken belief (often that a new disposition was valid), reviving the original will when that better effectuates intent.

What is republication by codicil and the doctrine of revival under the UPC?

Republication by codicil treats the will as re-executed (re-dated) as of the codicil's date. Revival: if a will that revoked an earlier will is itself revoked, the earlier will is revived only if the testator so intends (UPC looks to circumstances or a later instrument); revival is not automatic.

What are ademption and abatement in will construction?

Ademption: a specific gift fails (adeems) because the property is not in the estate at death (ademption by extinction). Abatement: the order in which gifts are reduced to pay debts/expenses—generally intestate property first, then residuary, then general legacies, then specific bequests last.

What is anti-lapse and when does it apply?

At common law a gift to a beneficiary who predeceases the testator lapses. An anti-lapse statute saves the gift by passing it to the predeceasing beneficiary's descendants, but only if the beneficiary was within a specified degree of relationship to the testator (e.g., grandparent's descendants under the UPC) and the will has no contrary survivorship condition.

What is the surviving spouse's elective (forced) share and its purpose?

The elective share lets a surviving spouse claim a statutory portion of the deceased spouse's estate (commonly one-third or, under the UPC, a percentage of the augmented estate scaled by length of marriage), overriding a will that disinherits them. It prevents disinheritance of a spouse; the augmented estate includes certain non-probate transfers.

What are pretermitted (omitted) heir statutes and how do they protect children and spouses?

A pretermitted child statute gives an intestate-like share to a child omitted from the will, presuming the omission was accidental—typically applying to children born or adopted after the will's execution. An omitted spouse (married after the will) similarly takes an intestate share unless the omission was intentional or provided for outside the will.