Question 1.  For the will to be valid, Wilma must have had capacity to make a will and it must have been properly executed. 

    Capacity requires that a person be 18 years or older and be of sound mind.  Here, Wilma (“W”) was 18 years old, so the only issue is whether she was of sound mind.  This requires that she have the capacity to (1) understand the nature of the testamentary act, (2) understand the nature and situation of her property, and (3) remember and understand her relations to living descendants, spouse, parents, etc. 

    This standard is easily met here.  As to (1), Wilma did research on the internet about wills and then typed one that looks almost professional.  As to (2), she was making a lot of money and seems to have understood what her assets were (e.g., she bought the Malibu house and devised it to her father).  And as to (3), the will itself shows she understood who the “natural objects of her bounty” (father and brother) were.  So she had capacity to make a will.

    The execution is more problematic.  To make a valid formal will, it must (1) be in writing, (2) signed by the testator, (3) signed by two witnesses who were present at the same time and witnessed the T signing the will, acknowledging the will, or acknowledging his signature.  The witnesses must also understand that the document they are signing is the T’s will.   

    The facts indicate that W printed out the will and then signed it, so (1) and (2) are met here.  As to (3), there were two witnesses present at the same time, it appears that they saw W sign the will, they knew it was her will, and they then signed.  The problem is that under the law, Jane was not competent to be a witness.

    There is also a problem with dad’s signature.  There can be no doubt that he was old enough and presumably he was mentally competent.  But a witness cannot be interested, in the sense of receiving some benefit from the will.  Dad receives a substantial benefit—the beach house—so he is clearly an interested witness.  Fortunately, under California law the signature of an interested witness is valid.  However, it creates a rebuttable presumption that the gift to Dad was procured by fraud, duress, or undue influence.  If Dad cannot rebut it, he is limited to getting an intestate share of W’s estate.  But what matters is that his signature is valid.

    The bottom line is that the will was properly executed except that it has only one valid witness’s signature.  Under strict compliance, it would fail.

     California generally requires substantial compliance, or the “near-miss” standard.  Here, all the formalities were complied with, except for the fact that one of the witnesses was 17 instead of 18.  The functions of the formalities—ensuring that W knew that this was an important act, protecting her from duress, etc., and providing good evidence of her intentions—were carried out here.  So there is a good chance a court would find that W’s will substantially complied with the requirements.

    Finally, California recently adopted the dispensing power with respect to the witnessing of wills.  Even if there is a problem with the witness’s signatures, the will is valid if there was clear and convincing evidence that the testator intended the document to be his will.  Given that W researched the requirements on the internet, then drafted her will and recruited her dad and Jane to witness it, there is no doubt she intended this document to be her will.

    Most likely the will is valid as a formal will under substantial compliance, and it certainly is valid under the dispensing power.

    One last option is that the will might also be a valid holograph.  It would have to be signed by the T (W signed it) and the material provisions would have to be in her handwriting. Because she typed it on her computer and printed it, the will is not a valid holograph.

Question 2.  Aunt Tess’s (“AT”) investment decisions raise several issues. 

    First, was AT’s decision to invest almost all the trust’s assets in a portfolio of high-yield stocks and bonds prudent?  A trustee must invest trust property as a prudent investor would.  One of the most important aspects of prudent investing is the duty to diversify.  The facts state that the portfolio of stocks and bonds was diverse, but only within the general category of high-yield stocks and bonds.  AT did not diversify by buying assets that produce capital appreciation (such as growth stocks), nor did she invest in government bonds or bank accounts, which would have protected the trust if the stock market collapsed (something that would have endangered both stocks and corporate bonds). 

    However, the modern prudent investor rule requires that the trustee, in deciding how to invest, take into account the purpose and distribution requirements of the trust.  Also, the duty to diversify does not apply if the trustee reasonably decides that there are special circumstances that justify not diversifying.

    Here, it seems very clear that Wilma’s main concern was to ensure that Bro could remain in the excellent care facility that she had paid for while she was alive.  Bro’s care was much more important than the remainder that would go to Habitat, with which W had not been heavily involved.  Considering that the lack of diversification was not extreme and that the primary purpose of the trust seems to have been to pay for Bro’s care in his current institution, AT likely did not violate the duty to diversify.

    Also, a trustee is traditionally required to be impartial (not favor either income or remainder beneficiaries).  AT clearly favored Bro over Habitat, which received a smaller remainder because of the invasion.  While that traditionally would have breached the duty of impartiality, the modern Uniform Principal and Income Act allows a trustee to re-allocate to further the intent of the settlor (see Howard case).  All indications are that W’s primary purpose was to give Bro the best possible medical care, and that Habitat mattered much less to her.  AT did not breach her fiduciary duties by favoring Bro.

    What about AT’s decision to invade principal to help pay for Bro’s care?  The trust language is mandatory as to income (“the net income”) but says nothing about invading principal.  Arguably, AT did not have the power to pay principal to Bro.  But W’s will also did not forbid it.  This is a tough call!